Home Depot sales resume growth

“Our sales are an indication that the economy is recovering and the consumer is back,” Carol Tomé, Home Depot’s chief financial officer, told The Atlanta Journal-Constitution. “Not back in a strong way, but back.”

Homeowners are buying items for basic repairs and maintenance, throwing in a few discretionary products like Martha Stewart patio sets and new lawn mowers, Home Depot said in its quarterly financial report.

The Atlanta-based chain posted a 3.3 percent rise in sales at Home Depot’s nearly 2,000 U.S. stores open a year or more. So-called same-store sales are a key retail metric.

It was the first positive comparison in 16 quarters for Home Depot, according to Colin McGranahan, an analyst with Bernstein Research.

He noted that Home Depot's growth beat that of Lowe's, the North Carolina-based rival that reported Mondaya 2.2 percent improvement in U.S. same-store sales.

Home Depot’s first quarter profit rose to $725 million, from $514 million, while revenue increased to $16.9 billion from $16.2 billion. Profit per share was 43 cents for the quarter that ended May 2. The performance beat Wall Street expectations.

Same-store sales performance has gotten better as 2010 progresses. April sales at U.S. stores rose 5.5 percent from a year earlier, after gaining 3.9 percent in March and dropping 1.2 percent in February, Tomé said.

Sales to contractors, which account for about 30 percent of Home Depot's business, continue to lag.

“The pros are in the store,” said Tomé. “Go to a store in the morning and you’ll see their pickup trucks. It’s just the number of items they have in their basket [are fewer] because their jobs are smaller.”

Chief Executive Frank Blake told investors on Tuesday that sales from pro customers have been improving from double-digit declines to single-digit declines. Tomé said the chain hopes the comparisons will turn positive later this year.

Home Depot said popular products were in core repair and remodel product lines, such as garden supplies, lumber, paint, electrical and lighting.

Lowe’s reported first-quarter earnings of $489 million, a 2.7 increase, on sales of $12.4 billion, a 4.7 percent increase, with executives saying sales trends showed a slight move toward more discretionary products such as riding mowers and gas grills.

Meanwhile, Wal-Mart Stores said first-quarter profit rose 10 percent to $3.3 billion, while sales gained 6 percent to $99.1 billion.

However, Wal-Mart’s same-store sales in the United States were down 1.4 percent, fueling concerns that Wal-Mart is losing higher-end customers to rivals like Target, or that unemployment continues to hold back the economy.