Home Depot, Fortune Brands hit the skids
Shares of Home Depot just broke below their January spike low. If you're a technically inclined type, you might remark that there doesn't appear to be much in the way of support until the bear market low (around $20 way back in January 2003).
Meanwhile, Fortune Brands just warned about the deteriorating earnings outlook. The company makes everything from Titleist golf balls to Jim Beam bourbon to Moen faucets. I've included an excerpt from the company's release, with my emphasis of certain comments in bold. What jumps right out at you is the striking admission that business deteriorated throughout the quarter, with April good, May worse, and June worse still …
“The environment has become more challenging for our brands and the second quarter is shaping up to be more difficult than we had anticipated,” said Fortune Brands president and chief executive officer Bruce Carbonari. “April was a solid month that tracked with our expectations, followed by softer-than-anticipated results in May. We’ve seen continued softness in June and it’s now clear that we will not make up the May shortfall.
“With the rapid spike in gasoline prices and the decline in consumer confidence, we’re seeing American consumers pull back. At the same time, the correction in the U.S. housing market has intensified. Together, this means that home improvement purchases and homebuilding remain soft, that many golfers are deferring ‘big ticket’ purchases of golf clubs, and that trading up to premium spirits brands continues in the U.S. but at a more moderate pace,” Carbonari continued. “Meanwhile, higher costs for commodities such as petroleum-based materials, glass and steel are adding to the pressures facing manufacturers.”