These are my notes from the quarterly HD conference call:

Q1 sales $17.9B down -3.4%
Same Store Sales down -6.5%

Diluted EPS 21 cents (includes 20 cent charge to shut down 15 stores)

Positives:
- showed merchandising improvements
- stopped promotional activity, which erodes brand name
- more customer-facing hours
- took stores out of the pipeline that will free up $1 Billion in cash
- China, Mexico, and Canada - all stores with positive same store sale comps

Negatives:
- weak demand for non-seasonal products
- home prices down -7.7%
- housing turnover down 30%
- more risk than opportunity for remainder of year

Focusing on the customer.
Voluntary turnover declining double digit rates - employees happier
Higher costs of credit due to private label credit card
Credit sales is 30% of the business.

There's 3 components to Cost of Credit:
1). Deferred Interest - this is a fixed fee paid for "no interest, no payments for 6 months on purchases over $299". It gets charged to Cost of Goods Sold. COGS.
2). Gain Share - Profit/Losses from people using the credit cards. These profits are going away because of defaults.
3). Interchange Fee - A charge to HD for the transaction.

Cost of Credit in 2007, as a % of credit sales, was less an 0.5% of sales.
In 2008, it should be around 2%.
Under stress testing, it could be as high as 4%.

Delinquencies were higher than anticipated, but have now stabilized.

- Vooch