Bad winter weather, particularly in the Northern states, pushed Home Depot's sales down in April, the start of its spring season.
The Atlanta-based home improvement company said sales were higher in the South and West, but an elongated winter in other states led to an overall decrease in same-store sales of .7 percent at U.S. stores. Overall sales of $16.82 billion in the company's first quarter were down .2 percent from sales of $16.86 billion in last year's first quarter.
Spring is Home Depot's busiest selling season, with 30 percent of its business in the first quarter coming from garden and other seasonal categories, Executive Vice President of Merchandising Craig Menear said.
Chief Financial Officer Carol Tome said she expects the company lost some business as a result of the bad weather, but thinks warmer conditions will lead shoppers to spend money at Home Depot stores as they plant shrubs and replace gutters damaged by winter storms.
"We saw strength inside the house," she said of positive sales in kitchen, electric and other categories. "We should be OK."
Lowe's, Home Depot's chief competitor, saw its sales fall 1.6 percent for the quarter. Same-store sales decreased 3.3 percent from the first quarter of 2010.
Peter Benedict, an analyst and managing director at Robert W. Baird, said Home Depot managed its expenses well for the quarter to offset rising gas prices and showed better results than some other businesses -- like Lowe's -- that also were affected by a cold April.
"Home Depot performed relatively well," he said. "It sounds like their business has been better in May."
Indeed, Tome said May same-store sales have been positive after same-store sales were down 4 percent in April. In addition to the effects of cold weather, the year-to-year comparison was hurt by last year's homebuyer tax credit and by falling lumber prices, Tome said.
The company has improved its gross margins and decreased its operating expenses, earning $812 million -- or 51 cents a share -- for the first quarter, a 12 percent increase over last year's first quarter, when Home Depot made $725 million, or 43 cents a share.
People continue to spend money maintaining, improving and refreshing their homes, Tome said, but aren't as willing to spend on big-ticket items. Home Depot saw a 1.9 percent decrease in its checkouts and a decrease in sales that were less than $50 or more than $900. The amount of an average sale rose 1.5 percent though, to $53.35.
Additionally, Home Depot Chairman and CEO Frank Blake said he is seeing strength in some cities where the housing market remains depressed, including Phoenix, Orlando, Miami and Los Angeles.
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