Home Depot Earnings Beat Expectations Despite Tepid Sales Growth

Home Depot Earnings Beat Expectations Despite Tepid Sales Growth Home Depot (HD) reported on Tuesday morning that third quarter net earnings rose a higher than expected 21% on lower expenses and cost cuts, prompting the nation's largest home improvement retailer to raise its fiscal 2010 earnings outlook, but lower its sales guidance.

Home Depot said it earned $834 million, or 51 cents per share in the quarter, compared with net earnings of $689 million, or 41 cents per share, in the same period last year. Analysts had expected earnings of 48 cents per share.

But the home-improvement chain recorded only a 1.4% increase in sales to $16.6 billion from the third quarter of 2009, a hair above analyst estimates of $16.59 billion. Comparable store sales for the third quarter grew 1.4% as well, and comparable sales for U.S. stores grew by 1.5%.

"Our third quarter sales reflect the fourth consecutive quarter of positive same store sales for our business," said Chairman and CEO Frank Blake. "As the business stabilizes, we continue to improve our operational performance. We are exercising good control over our expenses but we're also investing in the business to drive improvements across customer service, merchandising and our supply chain. I want to thank our associates for their hard work and dedication."

Home Depot has benefited in recent quarters from some channel restructuring, as well as cost cuts, which included layoffs. It has managed to increase profit through these measures even as home owners continue to shy away from large, expensive renovations. Until the housing sector improves, unemployment declines and the overall economy starts showing meaningful growth, top line growth at Home Depot will be hard to come by.

Shares of Home Depot jumped over 3% in early morning trading. The company said in a conference call it will use excess cash to repurchase shares in remainder of 2010.

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i will tell you my homedepo story i was in hd alittle or a lot dirty from worka bewilterd as hell looking at insulation alot of sales people around and no one would ask to help...but a clean guy came down the ailse way and he got ask for help...So i left the store and went to lowes and got 2 big bags for 145.00

November 16 2010 at 6:50 PM Report abuse rate up rate down Reply

it is really more about getting leaner and operating better. just like all the rest of the companies that are reporting improved profits on less sales. productivity is at an all time high. the fat, the waste, and unnecessary expenses are in the dumpster. unfortunately, so are a lot of jobs.

November 16 2010 at 4:11 PM Report abuse rate up rate down Reply

So what's the big deal? Their prices have gone up 21% also!

November 16 2010 at 1:10 PM Report abuse rate up rate down Reply