An unseasonably warm winter has meant more people working on home improvement projects, but Atlanta-based Home Depot said its sales increases through January were due to more than high temperatures.
States such as California and Florida, where winter is less of a factor and the housing markets were hit hard, had same-store sales at or above the company average. Home Depot Chairman and CEO Frank Blake said in a conference call Tuesday that results from those states indicate the housing market has found its floor.
"Those markets are more reflective of not a housing recovery, but a stabilization in the markets," he said.
Home Depot made $774 million in the fourth quarter, a 31.9 percent increase over the $587 million the company made in the same quarter last year. For the year, Home Depot made $3.9 billion, a 16.3 percent increase over the $3.3 billion it made a year earlier.
Home Depot attributes some of its success to weather that meant more people were replacing gutters and fixing roofs than normally would happen in winter -- sales that more than made up for a lack of fireplaces and snow removal equipment.
The number of sales over $900 was up 3 percent in the company's fourth quarter, and Home Depot Chief Financial Officer Carol Tome said the company saw good growth from professional customers who spend more than $10,000 at the store. That indicates more people are taking on higher-cost home-improvement projects.
The company's average ticket was up 2.6 percent, to $53.28 for the year, and the number of transactions rose .9 percent for the year.
Tome said there are some things the company likes about the housing market -- namely, the affordability. But there are other things, like the continued difficulty getting credit and the number of homes that are underwater, that make her think the housing market won't have a large impact on Home Depot's sales going forward.
Still, she said, Home Depot continues to see people spending money on small decor projects, as well as for maintenance and repair.
"It does suggest stabilization and some opportunity on the up side," she said.
There is the risk that some of the fourth-quarter sales were simply moved from later in the spring, said Wayne Hood, managing director for equity research at BMO Capital Markets. But he said a strong February indicates the company's business model can be leveraged going forward as the economy continues to improve.
"I clearly believe the economy is on solid footing and growing moderately," he said. "There's no indication the economy is taking another step down."
