<<<That statement implied that Home Depot was making a flagrant omission on their balance sheet with regard to
HD consumer accounts. If taken at face value, other uninformed readers of that would be left thinking you had
exposed a serious omission in their financial disclosures, when in fact no such omission exists.>>>
From: sec.gov
" PROFESSIONAL CUSTOMERS: ...In many stores we offer a variety of programs to these professional customers, including ... expanded credit programs..."
"While aimed at the professional customer, this program also enables us to better serve our D-I-Y customer with improved customer service, including delivery and will-call services, expanded credit programs and additional merchandise."
"For example, to better serve the increasing number of customers applying for credit while in our stores, the
charge card approval process time has been reduced to less than 30 seconds."
"CREDIT SERVICES. Home Depot offers credit purchase programs to both professional customers and D-I-Y and D-I-F-M customers. In fiscal 2001, 2.9 million new Home Depot credit accounts were opened, bringing the total number of Home Depot account holders to almost 10 million. Proprietary credit card sales accounted for approximately 21% of all Home Depot sales in fiscal 2001. We also offer an unsecured Home Improvement Loan that gives our customers the opportunity to purchase products and services in our stores. We believe that this loan program not only increases large sales, such as kitchen and bath remodels, but also generates incremental sales from our customers."
"We have another agreement expiring January 31, 2003 in the
notional amount of $690 million that swaps a variable interest rate for a fixed rate of 6 3/4%, designed to mitigate the interest rate risk related to the portfolio of our proprietary credit card, which is serviced by a third
party."
You stated:
<<<All of the consumer credit was outsourced to GE Capital... always has been. It was recently decided to move it over to CitiGroup.>>>
and:
<<<Me recollection is that the consumer credit accounts are non-recourse. The provider earns the interest and takes
the risk, not HD.>>>
I don't know where you come up with information suggesting the risk of ownership on the credit accounts has passed to a third party. If it has, there is no disclosure along those lines in the filing. In fact, "the portfolio of our proprietary credit card" pretty well establishes that the risk of ownership on those accounts belongs entirely to HD and that those accounts are only "serviced by a third party". The filing states numerous times that Home Depot is the party offering the credit. The filing states 21% of last year's sales were derived from issuing credit. The filing DOES NOT state the current size of that "portfolio". The filing DOES NOT state what income or losses are associated with the "portfolio". The filing DOES NOT state what risks are associated with issuing the credit.
I feel sorry for anyone who doesn't consider that to be a material omission of facts. |
