Home Depot Inc., the largest U.S. home-improvement retailer, said first-quarter profit rose 12 percent, meeting analysts’ estimates, as operating expenses fell faster than sales.
Net income advanced to $812 million, or 50 cents a share, in the quarter ended May 1, from $725 million, or 43 cents, a year earlier, the Atlanta-based company said today in a statement. Analysts projected 50 cents, the average of 20 estimates in a Bloomberg survey.
Home Depot, led by Chairman and Chief Executive Officer Frank Blake, reduced expenses including payroll and advertising in the quarter, countering a slight drop in revenue. Sales of lawn and garden items were hurt by bad weather in the U.S., while customer purchases of more than $900 also declined.
“We are still seeing those bigger-ticket, discretionary projects under pressure with the customer,” Craig Menear, executive vice president of merchandising, said on a conference call today. Discounts lifted demand for kitchen items, he said.
Home Depot advanced 42 cents to $37.40 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 6.7 percent this year.
Sales by stores open at least 12 months fell 0.6 percent, missing a forecast for a 1 percent gain, the median of five analysts surveyed by Bloomberg. Overall revenue fell 0.2 percent to $16.8 billion. Total operating expenses declined 1.8 percent to $4.4 billion.
The retailer raised its full-year diluted earnings per share to $2.24 from a previous forecast of $2.20.
Lowe’s Cos., the second-largest U.S. home-improvement retailer, reported yesterday first-quarter earnings of 34 cents a share, missing the average analysts’ estimate by 2 cents. The Mooresville, North Carolina-based company lowered its profit forecast for the year ending Feb. 3, 2012, to a maximum of $1.64, after customers cut back on renovations.
Home prices fell in more than three-fourths of U.S. cities in the first quarter as foreclosures devalued real estate, the National Association of Realtors said May 10.
Colder-than-average weather in the northeastern U.S. and rain across the country crimped Home Depot sales, according to a May 12 report by Jonathan Berg, a Piper Jaffray Cos. analyst in Minneapolis. He rates Home Depot “neutral.”
Heavy rain and severe conditions, including reports of 875 tornadoes, characterized April’s weather, according to the National Oceanic and Atmospheric Administration’s National Climatic Data Center in Asheville, North Carolina. It was the 10th-wettest April since 1895.
Economic growth slowed to a 1.8 percent annual rate in the first quarter after expanding at a 3.1 percent pace in the last three months of 2010, according to Commerce Department figures. Rising fuel and grocery bills are damping consumer confidence and squeezing the budgets of households, whose spending makes up 70 percent of the world’s largest economy.