Big-ticket items and the installed sales were relative non-factors for The Home Depot in its third quarter ended Oct. 31, the company declared today. Company officials said sales of $900 and more were down by 3.4% and the installation business, which accounts for less than 10% of total business, did not change much.
Chairman and CEO Frank Blake, along with other company officials, gave those assessments during a call with anlysts immediately following the company's announcement that net earnings in its third quarter grew 21% from the year-earlier period to reach $834 million on a 1.4% rise in sales to $16.6 billion and a 2.2% rise in gross profit to $5.69 billion. The earnings boost appeared to come primarily from a 0.9% drop in selling, general, and administrative costs to $3.84 billion and a 6.5% cut in depreciation and amortization expenses to $400 million.
The Home Depot regularly says that it aims to win over pro customers, a group that includes maintenance managers and landlords along with professional builders and remodelers. Those pros are believed to make up a significant share of the 3% of the company's customers that account for 30% of total sales, Home Depot officials have said regularly.
But big-ticket sales fell 3.4% in the third quarter from the one ended Nov. 1, 2009, executive vice president of merchandising Craig Menear said. And two areas where pros figure significantly--building supplies and millwork--both recorded unspecified declines in sales from 2009's fiscal third quarter. In contrast, the average tocket dropped just 0.8% to $51.47, and the number of customer transactions rose 2.5% to 322 million.
"Traffic, for us, has been the most significant thing over the past few quarters," Blake said.
"We are trying to shift our business to everyday values for our customers," Menear said.
Chief Financial Officer Carol Tome said the company's installation business has also remained stagnant. She said installations account for less than 10% of total revenue.
The company now execs sales to rose about 2.2% in fiscal 2010, which ends in January, while diluted earnings per share from continuing operations should increase by 25%.