Atlanta-based home improvement retailer Home Depot saw an increase in annual sales for the first time since 2006 as it raised its expectations for 2011.
The company credited an improving economy, in part, for a jump in fourth-quarter and annual profits in 2010.
"The overall picture is one of a stabilizing business," Home Depot chairman and CEO Frank Blake said.
Blake said states heavily affected by the housing crisis are no longer an anchor and performed in line with the rest of the country. Fourth-quarter sales were up nearly 5 percent in the U.S.
Home Depot saw positive same-store sales in every state but Georgia, leading to a 72 percent increase in profits for the fourth quarter. The company earned $587 million in the fourth quarter and $3.34 billion for the fiscal year ending in January, as compared to $342 million and $2.66 billion for the same periods in 2009.
Earnings per share doubled in the fourth quarter, to 36 cents a share from 18 cents a share, and rose to $2.03 a share for the year, from $1.56.
Chief financial officer Carol Tomé said the company expected sales at the end of 2010 to be down in Georgia, which at the end of 2009 was cleaning up from devastating floods.
"It was a pure weather story," she said.
Still, the company saw sales growth overall. It had raised its 2010 sales expectations to an increase of 2.3 percent in December, but sales rose 2.9 percent for 2010. Home Depot expects sales to be up 2.5 percent in 2011; it originally projected an increase between 2 and 2.5 percent.
In the fourth quarter, Home Depot saw a large increase in big-ticket purchases, which it said was fueled by expiring tax credits and the purchase of appliances. But the number of customers and the average amount those customers spent also rose.
In a research note, R.W. Baird analyst Peter Benedict called the increase in average spending a "welcome development." Analysts said Home Depot beat their expectations for the quarter and the year.
Tomé said housing remains soft, but shoppers are continuing to spend on core repair and remodeling projects. Still, consumers remain cautious about investing in their homes, said executive vice president of merchandising Craig Menear.
He hopes events that encourage bathroom refurbishments or new products like a line of lithium-battery-powered tools will help drive sales. Home Depot also is having spring sales events across the country.
Tomé said bad weather across much of the country in January and early February 2011 hurt sales by keeping people out of the stores, but that February same-store sales have been better than January's were.
About the Author
