Home Depot 2Q profit beats expectations

[August 18, 2009]  ATLANTA, Ga. (AP) -- Home Depot Inc. said Tuesday that its fiscal second-quarter profit fell 7 percent, as the nation's biggest home-improvement retailer shuttered its Expo business and continued to be pinched by the recession.

Still, the Atlanta-based company's adjusted results beat Wall Street's expectations, and it lifted its guidance for full-year earnings from continuing operations.

Shares rose 39 cents to $26.50 in premarket trading.

Home Depot earned $1.12 billion, or 66 cents per share, for the period ended Aug. 2. That's down from $1.2 billion, or 71 cents per share, a year earlier.

Excluding Expo-related charges, profit was 67 cents per share, topping analysts' forecasts for 59 cents per share, according to Thomson Reuters. Home Depot had announced in January that it planned to close its 34 Expo Design Centers.

Quarterly results also included an approximately $50 million tax benefit related to a favorable foreign tax settlement. The tax benefited boosted earnings by about 3 cents per share.

"Concerns about the housing market, rising unemployment and softness in the overall economy continue to pressure consumers," Chairman and CEO Frank Blake said in a statement.

Revenue dropped 9 percent to $19.07 billion from $21 billion, falling short of the $19.23 billion forecast of analysts polled.

Sales at stores open at least a year, known as same-store sales, slid 8.5 percent. Same-store sales are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones.

Results were markedly better than rival Lowe's Cos., which reported Monday second-quarter profit fell 19 percent, missing expectations, on weaker than expected sales. The No. 2 home-improvement retailer also narrowed its full-year profit outlook, in contrast to Home Depot.

Home Depot lifted its 2009 earnings from continuing operations forecast to flat to up 7 percent. Adjusted profit is expected to fall by 15 to 20 percent. Its prior guidance was for a 7 percent dip in earnings from continuing operations.

The retailer backed its expectation for revenue to be down about 9 percent.

Analysts predict full-year net income of $1.44 per share on revenue of $65.4 billion.

Home Depot, which has more than 300,000 workers, ran 2,240 retail stores at quarter's end.

[Associated Press]

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