A weakening economy is hammering the home improvement retailers. Both Home Depot and Lowe’s are feeling the slowdown.

Home Depot’s Net Falls 66% As Homeowners Cut Projects

The Wall Street Journal is reporting Home Depot’s Net Falls 66%.

A tough business environment and Home Depot Inc.’s moves to close underperforming stores and pull back on expansion led to a 66% drop in fiscal first-quarter net income for the home improvement giant.

Economic conditions that have kept homeowners from taking on major renovations and repairs continued in the first quarter, Chairman and Chief Executive Frank Blake said Tuesday. “In fact, conditions worsened in many areas of the country.”

Earnings Plunge At Lowe’s

CNN Money is reporting Lowe’s earnings plunge 17.9%.

Lowe’s Cos. reported a 17.9% drop in first-quarter earnings on Monday as the slumping U.S. housing market and softer economy hurt sales. Its shares fell almost 3% in premarket trading.

The nation’s second-biggest home improvement retailer said it earned $607 million, or 41 cents per share, in the three months ended May 2. That is down from $739 million, or 48 cents per share, in the first quarter of 2007.

Comparable-store sales — a closely watched gauge of retail health that measures sales at stores open at least a year — declined 8.4%. The company predicted that number would drop at least 6% in the current quarter and the year.

Consumers are willing to spend on home improvements if they think the value of their homes is rising. However, home prices are sinking and the jobs picture is bleak with four consecutive months of negative jobs as noted in April Jobs – Another Report From Bizarro World .

Finally, Countrywide And Chase Have Shut Off The Cash Spigot and there is credit tightening virtually everywhere. Some consumers who would still be recklessly spending will find their home equity lines (HELOCs) shut off. This situation is going to get far worse before it gets any better.

Mike “Mish” Shedlock
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