HD Supply Shares Retreat

HD Supply (HDS) shares dropped 6.5% in early trading as the industrial-distribution company cut its full-year guidance, even as fiscal first-quarter topped analysts expectations on Tuesday.

The Atlanta-based firm said it now expects adjusted per-share earnings between $3.52 to $3.70 for its fiscal 2020, down from its previous view of $3.52 to $3.81. Net sales are projected between $6.25 billion and $6.35 billion, down from $6.3 billion to $6.45 billion. Capital IQ had expected adjusted EPS of $3.69 on net sales of $6.24 billion.

For its fiscal first quarter ended May 5, HD Supply, which has approximately 270 branches and 44 distribution centers, reported revenue of $1.493 billion. This was up from $1.39 billion in the corresponding quarter of the prior year and ahead of the Street’s expectation for $1.491 billion. Adjusted earnings per share came in at $0.84, up from $0.70 a year earlier. This was ahead of analysts’ estimates of $0.81.

Broken down by business segment, the company posted net sales of $772 million for the facilities management unit, up 6.8% from the corresponding quarter of the prior year. Net sales in the industrial and construction unit were 8.3% higher at $721 million.

“The team overcame significant unfavorable weather in February to deliver on our promises during the first quarter of 2019,” Joe DeAngelo, chief executive of HD Supply, said. “In this current dynamic environment, we are intensely focused on what we can control, delivering profitable growth and executing on our capital allocation strategy.”

For the second quarter, the company is targeting net sales of $1.62 billion to $1.67 billion and adjusted net income per share of $1.04 to $1.12. Analysts had projected $1.7 billion for net sales and $1.19 for adjusted earnings per share.