ATLANTA – Home Depot Inc. (HD) Tuesday reported a 19 percent rise in second-quarter profit, topping estimates, as store renovations and better service drove sales improvement in every category.
The world's largest home improvement retailer raised its profit-growth forecast for the year.
Home Depot is "doing the right things in the front of the store and the right things in the back of the store," FTN Midwest Research analyst Eric Bosshard said, adding that efforts to polish the look of aging stores were drawing customers.
"It's certainly a formula that's absolutely succeeding right now," he added.
Atlanta-based Home Depot said net income rose to $1.5 billion, or 70 cents a diluted share, from $1.3 billion, or 56 cents a share, a year earlier.
Excluding the effects of an accounting change, the company said it earned 71 cents per share. On that basis, analysts on average were expecting profit of 65 cents a share, according to Reuters Estimates.
Sales at stores open at least a year, an important retail measure, rose 4.8 percent compared with a 2.2 percent rise a year earlier.
Total sales rose 11 percent to $20 billion. Home Depot said its average purchase rose 8 percent to $54.73, marked by growth in every selling category. Revenue in services, a business that installs windows and kitchens, rose 27 percent.
The retailer, which is also boosting worker training and incentives and investing in technology upgrades such as self-checkout counters (search), cited improvement in return on invested capital and operating margin.
"Our knowledgeable store associates are delivering on our company's core purpose: to improve everything we touch," Chairman Robert Nardelli said in a statement.
Home Depot, which is benefiting from a strong U.S. housing market, said it now expects earnings per share to rise 14 percent to 17 percent, up from its previous estimate of a rise of 10 percent to 14 percent. It reiterated sales growth guidance of 10 percent to 12 percent.
Analysts currently expect full-year profit of $2.16, which would represent an increase of nearly 15 percent from $1.88 in fiscal 2003, according to Reuters Estimates.
On Monday, rival Lowe's Cos. (LOW) posted an 18 percent rise in quarterly profit as same-store sales rose 5 percent.
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