|I stopped in several home depot stores over the last month and noted a huge difference in the customer services. They met everyone at the door and offered their help and were readily available to help in any section of the store. On the negative the places did not seem to be packed. |
Home Depot moves to 4th-quarter profit as economy, housing market begin to stabilize
Anderson and Michelle Chapman, AP Retail Writers, On Tuesday February 23, 2010, 1:13 pm EST
NEW YORK (AP) -- Improving sales of paint, flooring and plumbing show home owners are making a cautious return to basic do-it-yourself and home decor projects, Home Depot Inc. said Tuesday.
Cost-cutting and stronger sales drove its fiscal fourth-quarter profit higher, the largest U.S. home-improvement retailer said Tuesday.
Home Depot also boosted its quarterly dividend for the first time since 2006 and gave a 2010 profit forecast above analyst expectations. Shares briefly touched a 52-week high.
Consumers cut back on home-improvement projects during the recession and housing slump, and Home Depot has responded to weak sales by scaling back store openings and cutting jobs.
CFO Carol Tome said now more customers are coming into the store and spending money on "core DIY," products like paint. They're still holding back on higher-priced items, she said.
Though conditions are beginning to improve, "the economy is not out of the woods yet," said CEO Frank Blake. He expects 2010 to be a "transitional" year, with "relatively flat" growth in the first half of the year and more momentum in the second half.
"Calling the year 'transitional' doesn't sound very exciting, but we have been waiting for this transition for a long time," Blake said.
The company, based in Atlanta, earned $342 million, or 20 cents per share, for the quarter. Adjusted earnings were 24 cents per share, which excludes a $163 million writedown related to its HD Supply investment.
A year ago, Home Depot lost $54 million, or 3 cents per share.
Analysts surveyed by Thomson Reuters predicted a smaller profit of 17 cents per share. Those estimates typically exclude one-time items.
Sales for the three months ended Jan. 31 dipped 0.3 percent to $14.57 billion. That beat Wall Street's $14.07 billion.
Revenue from people spending $50 or less -- which makes up about 20 percent of Home Depot's U.S. sales -- rose 3.2 percent. Revenue from people spending $900 or more -- also 20 percent of U.S. sales -- fell less than 1 percent, significantly better than double-digit declines in previous 2009 quarters.
Kitchen & bath, paint, flooring and plumbing sales were positive, while higher-priced items including lumber, hardware and electrical products were weaker.
Quarterly sales at stores open at least a year rose 1.2 percent, including a 2.3 percent rise internationally and 1.1 percent drop in the U.S. It was the company's first positive showing since 2006.
That figure is a key indicator of retailer performance because it measures growth at existing stores rather than newly opened ones.
Both Home Depot and smaller rival Lowe's boosted profit during the most recent quarter by cost cutting. On Monday Lowe's said its fourth-quarter profit rose 27 percent. Home Depot has scaled back store openings and cut jobs.
The retailer's full-year profit climbed 18 percent to $2.66 billion, or $1.57 per share. Adjusted earnings were $1.66 per share for fiscal 2009. Annual sales fell 7 percent to $66.18 billion from $71.29 billion.
For fiscal 2010, the retailer predicts earnings from continuing operations of $1.79 per share, with sales up about 2.5 percent. Based on 2009's revenue of $66.18 billion, that implies sales of $67.85 billion for the year.
Analysts expect a 2010 profit of $1.73 per share on revenue of $66.43 billion.
Shares rose 33 cents to $30.65, after earlier reaching a 52-week high of $30.84.