Home Depot Inc. (HD), the largest home improvement retailer, reported better-than-expected quarterly results. The numbers suggest that consumers are investing in their most valuable assets -- their homes -- as the economy continues its slow climb out of the worst economic crisis since the Great Depression.
Net income in the Atlanta-based company fiscal first quarter was
Excluding a $117 million charge related to the closure of the EXPO business, profit would have been $587 million, or 35 cents, beating Wall Street forecasts. Lowes Cos. (LOW), Home Depot's main rival, reported better-than-expected results yesterday. Saks Inc. (SKS) recently reported a smaller-than-expected quarterly loss as the upscale retailer was able to cut costs and trim inventory.
Chief Executive Frank Blake, who has won kudos from investors in the wake of the disastrous tenure of Robert Nardelli, spooked investors by sounding a cautionary note in the earnings release. Earlier this year, Home Depot said it would slash 7,000 jobs this year and announced a wage freeze. Investors often note that companies can't boost profits by cutting costs alone.
"Our markets, and the consumer in general, remain under pressure," he said.
Home Depot, whose shares have surged more than 13 percent this year, reaffirmed its guidance for fiscal 2009 for sales to be down nine percent with negative comparable store sales in the high single digit area and earnings per share from continuing operations down seven percent.