NEW YORK, N.Y. – Home Depot said Tuesday that its first-quarter net income climbed nearly 28 per cent as unseasonably warm winter and increased business from contractors and other professional customers boosted results at the world’s biggest home-improvement company.
The company raised its 2012 net income guidance on the better-than-expected profit. But its revenue fell short of Wall Street expectations, sending its stock down 2.4 per cent in trading.
Home Depot’s results illustrate what’s going on in the U.S. economy. While a prolonged U.S. housing slump has caused some Americans to cut back on spending on their homes, contractors and other professionals are starting to buy again. Confidence among U.S. builders rose to the highest level in five years in May, according to The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday.
CEO Frank Blake said larger professional customers are coming back more quickly than smaller professional customers and do-it-yourselfers.
“This suggests a thawing process with the larger customers recovering first, with – hopefully – stronger recovery spreading,” he said. “While there are some positive signs in the housing market, it is still under pressure.”
The Atlanta-based company, which has more than 2,200 stores worldwide, also benefited from mild weather. This spring — the fourth warmest in the company’s history — led to strong sales of products like lawn mowers and lawn products, grills, planters and other gardening and outdoor products. Plumbing and kitchen products were weaker.
Home Depot Inc. reported net income of $1.04 billion, or 68 cents per share, for the period ended April 29. That’s up from $812 million, or 50 cents per share, a year earlier. The latest results beat the 64 cents per share that analysts polled by FactSet expected.
Revenue rose 6 per cent to $17.81 billion from $16.8 billion. But that missed Wall Street’s estimate of $17.89 billion. Revenue at stores open at least a year rose 5.8 per cent, with the metric climbing 6.1 per cent for U.S. locations. This figure is a key indicator of a retailer’s health because it excludes results from stores recently opened or closed.
Total transactions rose 4 per cent while the average ticket per customer rose 2 per cent. The number of people spending less than $50, about 20 per cent of sales, rose 2.4 per cent. The number of people spending over $900, also 20 per cent of sales, rose 6.7 per cent during the quarter.
The company expects fiscal 2012 earnings of $2.90 per share, with revenue up about 4.6 per cent. This implies revenue of approximately $73.66 billion. Home Depot previously predicted earnings of about $2.79 per share and a 4 per cent revenue increase. Analysts had expected earnings of $2.90 per share on revenue of $74.06 billion.
Home Depot shares fell $1.21, or 2.4 per cent, to close at $48.67 Tuesday. The stock has risen 16 per cent since the beginning of the year.
Home Depot’s smaller rival Lowe’s Cos. reports quarterly results on Monday.
Associated Press Writer Michelle Chapman contributed to this report