Home Depot Inc. (HD) beat Wall Street expectations and raised its forecast for the rest of the year, even as the weak economy and housing market took a bite out of its second-quarter results.
The nation's largest hardware chain posted net income of $1.1 billion, or 66 cents per share -- down seven percent from the same time last year, beating expectations of only 59 cents per share in earnings. CEO Frank Blake credited cost-cutting and gains in market share with helping Home Depot pull off what passes for a successful quarter these days.
The numbers suggest that homeowners are doing a lot more walking around the store than spending. While store traffic is stable -- customer transactions for the quarter were up 0.3% -- the average sale during the quarter was only $52.25, compared to $57.58 last year, down 9.3 percent. Sales for the quarter were $19.1 billion, down 9.1 percent from last year, and same-store sales were down 8.5 percent.
"Concerns about the housing market, rising unemployment and softness in the overall economy continue to pressure consumers," said Blake.
However, Home Depot's management felt confident enough to raise its earnings guidance to analysts for the rest of the year, even while keeping its previous sales forecast. It's still calling for a sales drop of nine percent for the fiscal year, but executives now say earnings will be flat to up seven percent for the year. They had forecast a drop of seven percent earlier this year.
Home Depot had also beat analysts' expectations in the last two quarters, but the company's stock has gotten smacked down for management's refusal to boost its future forecasts in the face of those results. It also dropped yesterday after rival Lowe's Cos. (LOW) posted a disappointing quarter. Home Depot executives kept their forecast stable after their last quarterly report, saying consumers are still spooked and the economy wasn't showing enough signs of turning over in the second half of the year.
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