The Home Depot's net earnings roared 41% higher in its fiscal first quarter ended May 2 from the year-earlier period to reach $725 million, while sales added 4.3% to $16.9 billion, the company reported today. But officials said The Home Depot has yet to see a recovery in the pro segment of its customer base.
Nevertheless, The Home Depot said it now expects sales to rise 3.5% this year and diluted earnings per share of continuing operations to rise 21%. "While we're pleased with the first quarter, the outlook is still the same as in February: We see this as a transaitional year ... slow, sequential improvement over the course of the year into 2011," CEO Frank Blake told analysts.
The Home Depot includes in its pro designation not just builders and remodelers but also maintenance managers, rental unit managers and government workers. Together they account for about 30% of The Home Depot's total sales.
Craig Menear, the Atlanta-based company's executive vice president for merchandising, said during the call with analysts that revenue from this category had been falling last year at double-digit negative percentages year over year. Since then, it has moved from high single-digit negatives to the point where in the first quarter the segment's sales decline was in "a low single-digit negative environment," he said.
Sales tickets of $900 or more, which account for 20% of The Home Depot's total sales, were down 1.4% in January through March from the same quarter in 2009, Menear said.
Some product categories closely tied to the pro market, including fasteners, power tools, and power tool accessories, all showed signs of improvement year over year, Menear said. But plywood sales still were negative compared with 2009's first quarter, while roofing and windows "have performed well," he said, while remaining below last year's levels.
As for pro remodeling activities, company officials noted they have ye to see increased activity in special-order kitchen and bath sales.
Same-store sales at Home Depot stores in the United States were up 3.3% over the quarter, starting with a 1.2% decline in February before rising 3.9% in March and jumping 5.5% in April.
The cost of sales increased 3.2% to $11.07 billion while selling, general, and administrative expenses grew just 0.9% to $4.08 billion. Those two factores helped operating income climb 33.2% to $1.31 billion.