Home Depot Tops Profit Estimates, Hikes Dividend

Home DepotHome Depot Inc. (HD) said cost-cutting and gains in sales of items such as paint, flooring and plumbing helping it move to a fourth-quarter profit.

Consumers cut back on home-improvement projects during the recession and housing slump, but conditions have slowly started to improve, causing more to take on big projects.Improved profitability led the largest U.S. home-improvement retailer to boost its quarterly dividend for the first time since 2006 and give a 2010 profit forecast above analysts' expectations.

Home Depot's stock gained 17 cents to $30.49 in premarket trading.

The company earned $342 million, or 20 cents per share, for the quarter. Adjusted earnings were 24 cents per share, which removed a $163 million writedown related to its HD Supply investment.

A year ago, Home Depot lost $54 million, or 3 cents per share.

Analysts surveyed by Thomson Reuters predicted a smaller profit of 17 cents per share. Those estimates typically exclude one-time items.

Sales for the three months ended Jan. 31 dipped 0.3 percent to $14.57 billion. That beat Wall Street's $14.07 billion. Quarterly sales also benefited from kitchen and bath purchases and sales overseas.

Sales at stores open at least a year rose 1.2 percent, an improvement from the third quarter's decline of 6.9 percent. In the U.S., those sales dropped 1.1 percent for the fourth quarter.

That figure is a key indicator of retailer performance because it measures growth at existing stores rather than newly opened ones.

Home Depot offset some of its sales weakness during the quarter with cost reductions, lowering its total operating expenses to $4.29 billion from $4.69 billion.

Similarly, smaller rival Lowe's reported on Monday that its fourth-quarter profit rose 27 percent on cost cuts and modestly higher sales, as demand for items such as appliances and countertops improved.

Home Depot's full-year profit climbed 18 percent to $2.66 billion, or $1.57 per share. Adjusted earnings were $1.66 per share for fiscal 2009.

Sales at stores open at least a year declined 6.6 percent, with the U.S. sales figure off 6.2 percent.

Annual sales fell 7 percent to $66.18 billion from $71.29 billion.

For fiscal 2010, the retailer predicts earnings from continuing operations of $1.79 per share, with sales up about 2.5 percent. Based on 2009's revenue of $66.18 billion, that implies sales of $67.85 billion for the year.

Analysts expect a 2010 profit of $1.73 per share on revenue of $66.43 billion.

Home Depot lifted its quarterly dividend by 5 percent to 23.625 cents. The dividend will be paid on March 25 to shareholders of record March 11.

The company had 2,244 stores at quarter's end.

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