Business from professional contractors is coming back gradually, Home Depot's CEO said, at a slower pace than do-it-yourself customers overall, but with more strength from the biggest professional customers.
It's a sign of a "gradual thaw" in the housing market, Home Depot chairman and CEO Frank Blake said in a company conference call Tuesday, even as he said housing is still under pressure. Customers continue to do their own projects to save money, and credit remains hard to come by, he said.
"The housing market is definitely better," Blake said. "It's better, but it's not yet that much better."
Sales to professional contractors grew 5 percent for the first quarter of the year, while sales to professional contractors who spent $10,000 or more at Home Depot -- a group that makes up 12 percent of all professional customers -- were up 11 percent, chief financial officer Carol Tomé said. Sales to non-professional customers rose 7 percent, and Home Depot's same-store sales were up 6.1 percent in the U.S.
Tomé said professional customers' shopping patterns have begun to change. Those who in the past would have shopped only to repair storm-damaged roofs, for example, are now filling their baskets with items from across the store.
Home Depot increased its sales expectations for the remainder of the year based on a strong first quarter, but Tomé said business had not changed fundamentally, and there was no indication that it would for the rest of the year. Good weather that drew shoppers outside -- and into projects -- pushed sales above expectations. Home Depot expects its second quarter to be the slowest of the year, in part because of warm-weather projects shifting earlier.
"Outside of weather, the business didn't get any better at all," said Colin McGranahan, a research analyst with Sanford Bernstein.
McGranahan said the company's profit margins remain flat and the slow recovery of housing means sales will likely be subdued.
Home Depot made $1.04 billion in the first quarter, a 27.5 percent increase over the $812 million the company made in the first three months of 2011. Earnings were helped by $43 million by the termination of a loan guaranty to HD Supply, a business Home Depot sold in 2007.
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