Home Depot raises profit view, hopes for housing market
By Dhanya Skariachan
(Reuters) - Cost controls and market share gains helped Home Depot Inc beat Wall Street's profit estimates for the latest quarter, prompting the No. 1 home improvement chain to raise its earnings outlook for the fiscal year.
The retailer is also seeing improvements in California and Florida, states that were hit hard by the housing downturn, Chief Executive Officer Frank Blake said on Tuesday.
The news boosted Home Depot shares as much as 4 percent to their highest level in 12 years and raised hopes that the company was positioned to keep outdoing rival Lowe's Cos Inc once the housing market and the U.S. economy stabilize further.
"The worst of the (housing) crisis is behind us," said Barclays analyst Alan Rifkin, who added that he was seeing signs of stability after years of declines.
Groundbreaking on new U.S. homes rose in June, hitting its fastest pace in more than three years, a report showed last month.
"Housing is now a contributor to GDP growth, rather than a drag," said Blake, who has often been credited for improving Home Depot's merchandise, supply chain and customer service.
For Home Depot, he said, Florida and California were among the best-performing states in the quarter in terms of sales growth at stores open at least a year.
During the housing downturn, Home Depot's same-store sales were down more than 20 percent in those markets, Chief Financial Officer Carol Tome told Reuters, but shoppers there are now spending across the store. Continued...