Housing recovery boosts Home Depot results; outlook raised
By Dhanya Skariachan
(Reuters) - Home Depot Inc (HD.N: Quote) reported higher-than-expected quarterly results and raised its sales and profit outlook for the year on Tuesday as the world's largest home improvement chain benefited from a nascent recovery in the U.S. housing market.
The news pushed the retailer's shares up as much as 3.4 percent to an all-time high and gave fresh evidence that the U.S. housing market was improving after years of weakness.
For the first time since 2008, sales to contractors and professional customers grew at a faster pace than those to regular homeowners and other shoppers, Chief Executive Officer Frank Blake said on a conference call.
"This quarter's outperformance from the pro segment is a positive sign" of a housing recovery, Blake said.
A bubble in the U.S. housing market was at the core of the 2007-2009 financial crisis. During the downturn, Home Depot's sales at established stores fell more than 20 percent in such markets as Florida and California. In recent quarters, the company has gotten a boost as housing markets have rebounded in regions where it has a heavy presence.
"In the first quarter, we saw less favorable weather compared to last year, but we continue to see benefit from a recovering housing market that drove a stronger-than-expected start to the year for our business," Blake said.
Recent government data showed permits for single-family homes rose 3 percent to 617,000 in April, the highest since May 2008, while newly issued building permits, a gauge of future construction, rose 14.3 percent.
SALES STRENGTH Continued...