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% 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% 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% to $22.5 billion. Analysts estimated $21.8 billion, on average. Sales at stores open at least a year rose 10.7%, the most since climbing 11% 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 increased 3.5% to $77.81 at 7:31 a.m. in New York. The shares advanced 22% this year through yesterday, compared with a 15% gain for the Standard & Poor’s 500 Index.