Home Depot raises outlook after profit climbs
ASSOCIATED PRESS August 14, 2012 8:56AM
FILE - In a Nov. 14, 2011 file photo a truck pulls out of the parking lot at a Home Depot store in Oklahoma City. Better sales in the U.S. and healthy demand for its mainstay home-improvement products helped Home Depot's net income rise 13 percent in its fiscal second quarter the company reported Tuesday Aug. 14, 2012. (AP Photo/Sue Ogrocki)
Updated: August 14, 2012 11:10AM
ATLANTA — The Home Depot Inc. is feeling more upbeat about its prospects after healthy sales and cost-cutting built up its second-quarter profit.
The world’s biggest home-improvement retailer said Tuesday that better sales in the U.S. and demand for its mainstay home-improvement products helped lift its net income by 12 percent during the period.
The Atlanta-based company boosted its full-year earnings outlook, citing its performance so far this year.
Revenue at stores open at least a year rose 2.1 percent. For U.S. stores, the figure rose 2.6 percent. The metric is a key gauge of a retailer’s health because it strips out the impact of recently opened or closed locations.
Chairman and CEO Frank Blake said in a statement that sales of seasonal items, such as gardening products, began in the first quarter because of the warm winter and slowed a bit in the second quarter. But demand for core products continued.
Home-improvement companies have managed to keep customers coming to their stores in part because of the slow-to-recover housing market. Homeowners who have been hesitant to sell while home prices remain deflated have instead focused on smaller, do-it-yourself projects.
Now that the housing market is starting to recover slightly, home prices are climbing somewhat and construction is on the rise. This will help companies like Home Depot as contractors head in for supplies. Confidence in the housing market also may mean homeowners will be willing to spend more on home-improvement projects, such as redoing a kitchen or bathroom.
Home Depot’s total operating expenses also eased to $4.46 billion during the quarter, down 3 percent from a year ago.
Looking ahead, Home Depot now expects fiscal 2012 earnings of $2.95 per share. It previously predicted $2.90 per share. The company still anticipates a 4.6 percent rise in sales, implying revenue of $73.63 billion.
Analysts foresee earnings of $2.92 per share on revenue of $73.95 billion.
Home Depot runs more than 2,200 stores in the U.S. and around the world. Its smaller rival Lowe’s Cos. reports its earnings Monday.
Shares of Home Depot were up 68 cents at $53.50 in premarket trading.