Home Depot reaps benefits from U.S. housing rebound
By Dhanya Skariachan
(Reuters) - A recovery in the U.S. housing market helped boost Home Depot Inc's (HD.N: Quote) quarterly profit and sales above analysts' estimates, prompting the world's largest home improvement chain to raise its outlook for the fiscal year.
The U.S. retailer also reported its first double-digit rise since 1999 in sales at stores open at least a year and had the highest quarterly transaction count in its history, Chief Executive Officer Frank Blake said on Tuesday.
Sales were strong across the country, Blake added.
The news, which came just days after data showed that U.S. housing starts rose 5.9 percent in July, gave more evidence that the market for homes was healing after years of weakness.
"These stronger results demonstrate the sales leadership of the housing/home improvement segment and Home Depot's strong positioning and execution within it," said Credit Suisse analyst Gary Balter. He said he believed the company's future sales would also beat estimates as the housing recovery advances.
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, housing has rebounded in those markets and other states where Home Depot has a heavy presence, such as Arizona and Nevada. In May, the company said its sales to contractors and professional customers increased faster than those to individual homeowners and other shoppers for the first time since 2008.
"In 2008, the consumer was really focused on core repair and maintenance," Chief Financial Officer Carol Tome said in an interview. "Fast-forward to 2013: Home prices are better, and as consumers start to see their home price appreciate, they start to view their home as an investment and not an expense." Continued...