Tuesday, November 17, 2009

Home Depot Profit Beats Street; Outlook Raised

. Tuesday, November 17, 2009

By stockOzone team

Home Depot Inc (HD.N) posted a higher-than-expected quarterly profit and raised its full-year outlook as the top home improvement chain cut costs to offset weak demand for big-ticket remodeling projects.

Although the company is seeing "some positive signs of stabilization," Chief Executive Officer Frank Blake warned there was "still a great deal of pressure" in the housing and home improvement markets.

Home Depot and smaller rival Lowe's Cos Inc (LOW.N) have suffered from the prolonged U.S. housing slump. On Monday, Lowe's said it did not expect a market recovery to begin until the middle of 2010.

Home Depot said net profit fell to $689 million, or 41 cents a share, in the third quarter ended on Nov. 1 from $756 million, or 45 cents a share, a year earlier.

Analysts on average were expecting earnings of 36 cents per share, according to Thomson Reuters I/B/E/S.

Sales fell about 8 percent to $16.36 billion, beating the analysts' average forecast of $16.28 billion.

Home Depot has been quicker to cut costs and constrict inventory levels than Lowe's, and in some cases has benefited as housing markets improved in regions where it has a heavy presence.

Same-store sales fell 6.9 percent in the third quarter, with those at U.S. stores down 7.1 percent.

For the full year, Home Depot sees earnings of about $1.55 a share from continuing operations before items, down about 13 percent from the prior year. It had earlier forecast a decline of 15 percent to 20 percent.

Home Depot said it still expected sales to fall by about 9 percent this year.

Disclosure: Author does not own any of the stocks discussed here.





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