Aug. 20 (Bloomberg) -- Home Depot Inc., the largest U.S. home-improvement retailer, posted second-quarter profit that topped analysts’ estimates and raised its annual forecast as shoppers buoyed by the housing recovery spend more on projects.
Net income in the quarter ended Aug. 4 advanced 17 percent to $1.8 billion, or $1.24 a share, from $1.53 billion, or $1.01, a year earlier, the Atlanta-based company said today in a statement. Analysts projected $1.21, the average of 25 estimates in a Bloomberg survey.
Comparable-store sales jumped the most in 14 years after Chief Executive Officer Frank Blake improved the retailer’s distribution and merchandising amid the housing downturn. He also reduced costs as the market went into crisis. Now that home prices are again on the rise, consumers are spending more, with the average purchase at Home Depot increasing 4.3 percent to $57.39 in the quarter.
“They’ve done a fantastic job over the past three or four years managing inventories and controlling expenses,” John Tomlinson, an analyst at ITG Investment Research in New York, said today by telephone. “As a result, they’re capitalizing on the recovery of the housing market. With stable and rising home prices, people are more willing to invest in their homes.”
Revenue rose 9.5 percent to $22.5 billion. Analysts estimated $21.8 billion, on average. Sales at stores open at least a year rose 10.7 percent, the most since climbing 11 percent in the second quarter of 1999, Stephen Holmes, a Home Depot spokesman, said today by e-mail.
Profit this year will be about $3.60 a share, up from its previous projection of $3.52, the company said. Analysts estimated $3.64, on average.
Home Depot sank 1.2 percent to $74.29 at the close in New York, retreating from an intraday gain of as much as 3 percent, after Chief Financial Officer Carol Tome told analysts sales growth will slow in the second half of the year.
Moderating prices for commodities such as paneling and slowing growth of appliances will restrain same-store sales, Tome said. In addition, year-earlier sales benefited from spending on hurricane-related repairs that Home Depot doesn’t anticipate this year, she said.
Home Depot has advanced 20 percent this year, compared with a 16 percent gain for the Standard & Poor’s 500 Index.
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