Home Depot Profit Beats Analysts’ Estimates on Warm Weather

Home Depot Profit Beats Analysts’ Estimates on Warm Weather

Home Depot Inc., the world’s largest
home-improvement retailer, reported fourth-quarter profit that
exceeded analysts’ estimates as warmer weather helped spur an
increase in residential spending.
Net income in the quarter ended Jan. 29 increased 32
percent to $774 million, or 50 cents a share, from $587 million,
or 36 cents, a year earlier, Atlanta-based Home Depot said today
in a statement. Analysts projected 42 cents, the average of 24
estimates compiled by Bg.
Home Depot attracted customers who spent more as U.S.
unemployment sank to a three-year low in January and builders
began work on more houses. Warmer weather helped sales at stores
open at least a year advance 5.7 percent, the biggest gain since
a 7.7 percent increase in the first quarter of 2004. That topped
the average estimate for a 3 percent gain by five analysts.
“It was a pretty fantastic quarter given the continued
pressure on the U.S. consumer and the overall softness of the
U.S. recovery,” John Tomlinson, an analyst at ITG Investment
Research in New York, said today in a telephone interview. “The
warmer weather helped outdoor home renovation projects and
allowed builders to get a head start on construction.”
Home Depot rose 3.4 percent to $48.30 at 7:23 a.m. in New
York. The shares gained 20 percent last year.
The company projected full-year earnings of $2.79 a share,
with stock buybacks. Analysts projected $2.77 a share. The
retailer said it will repurchase about $3.5 billion in stock.

Construction Spending

Revenue may increase by about 4 percent to $73.2 billion,
compared with analysts’ estimate of $72.5 billion.
In the fourth quarter, the number of customer transactions
rose 3.6 percent to 303 million, and shoppers spent $52.54 on
average, an increase of 2.4 percent from a year earlier.
Revenue rose 5.9 percent to $16 billion. Analysts predicted
$15.5 billion, the average of estimates compiled by Bg.
“With warmer weather, our business delivered results that
exceeded our expectations,” Chairman and Chief Executive
Officer Frank Blake said in the statement.
Construction spending in the U.S. rose 1.5 percent in
December, Commerce Department figures showed Feb. 1. That was
more than the median analyst estimate of a 0.5 percent gain. The
increase, which included a 0.8 percent gain in homebuilding
outlays, was the biggest jump since August.