ATLANTA – Home Depot Inc., the world's largest home improvement retailer, on Tuesday said its fiscal third-quarter earnings rose 20 percent as cost controls helped the company weather the weak economic environment.
Home Depot said it expects to meet Wall Street's consensus earnings estimate of 28 cents per share for the fourth quarter, resulting in earnings for the full year of $1.27, a 15 percent rise over the previous fiscal year.
Aram Rubinson, an analyst at UBS Warburg, said the company was seeing ``improved new-store productivity and improved pre-opening costs per store.''
``They're being diligent on the cost side of the equation and expanding their margins,'' he said.
For the third quarter, ended Oct. 28, Home Depot reported net income of $778 million, or 33 cents a diluted share, up from $650 million, or 28 cents a share, a year earlier.
Analysts on average had expected earnings of 32 cents to 34 cents a share, with a consensus estimate of 33 cents, according to research firm Thomson Financial/First Call.
Sales rose 15 percent, to $13.3 billion from $11.5 billion a year earlier.
As an example of just how difficult the economy has been, Home Depot's third-quarter same-store sales, an important barometer that measures sales at stores open at least a year, were flat, compared with a 4 percent gain a year earlier.
``That's the missing ingredient, and that's the economic sensitivity,'' said Rubinson.
Analysts have said Home Depot, which has a wider geographic reach than its main rival, Lowe's Cos. Inc., is more sensitive to economic cycles. Early last month, Lowe's said it expected same-store sales to rise 2 percent to 4 percent in the third quarter.
The outlook for home-improvement retailers is generally bright, since housing remains a pocket of economic strength.
In a news release, Home Depot Chief Executive Robert Nardelli said the company was ``generating better operational efficiencies'' while improving customer service.
The company said it had completed the roll-out of its Service Performance Improvement initiative to all of its 1,239 stores. The program is designed to reduce aisle clutter by shifting product receiving to evening hours.
Home Depot also said it added its ``Pro'' initiative, which focuses on specialized services for professionals such as contractors, to 108 stores in the third quarter.
During the quarter, Home Depot acquired Your ``Other'' Warehouse, a plumbing distributor, and launched electronic-commerce initiatives for its Expo Design Center stores.
The company opened 46 new stores in the quarter, bringing the number of new-store openings this year to 161.
Lowe's has said its fiscal third-quarter profit will be in line with prior guidance of 30 cents to 32 cents a share. It is to release its third-quarter results on Nov. 19.