The results are grim at the big home stores now that all those improvements made by new owners and eager sellers have dried up.
Home Depots (HD) saw second-quarter net income fall by 24 percent. CEO Frank Blake blamed "pressure on the consumer." Earnings fell to 71 cents a share from 81 cents a year ago.
That follows Lowe's Cos. (LOW) report, which was less bad than Wall Street expected but included sharply lower sales forecasts for the rest of the year. CEO Robert Niblock said the business will struggle into 2009.
The size and breadth of the sales slowdown is showing up at other retailers, too.
Target (TGT) may exemplify the difficult cross-current of a weak consumer and tightening credit. Its second-quarter income fell 7.6 percent and credit-card related profits slumped by 65 percent as the big-box giant faced higher defaults and raised its capital reserves. (Target sold 47 percent of its credit card receivables to J.P. Morgan in May for a $3.6 billion cash infusion). Meanwhile, July same-store sales fell 1.2 percent in July, and the company said August could be worse, as back-to-school demand suffers.
Lastly, office supply giant Staples (SPLS) shares fell almost 10 percent after it warned that second-quarter earnings would fall short. It now says revenue will still rise 3 percent, but earnings per share will fall by 15 percent. That's below forecasts for break-even earnings in the quarter offered by the company at the end of the first quarter.