DOW JONES NEWSWIRES
Home Depot Inc.'s (HD) fiscal third-quarter profit fell a less-than-expected 8.9% amid weak demand as consumers remain shy about spending on home improvements.
The biggest home-improvement retailer also boosted its fiscal-year earnings target, projecting a profit from continuing operations of about $1.55 a share, or a 13% decline. The company had seen a 15% to 20% drop.
Nonetheless, "there is still a great deal of pressure in the housing and home improvement markets, though there are some positive signs of stabilization," said Chairman and Chief Executive Frank Blake.
Chief Financial Officer Carol Tome said last week that business isn't picking up and hasn't yet benefited from government stimulus money that should be filtering down to the housing sector. The home-improvement sector has been slammed by the economic downturn and housing-market slump, which have led consumers to put off big-ticket purchases and improvement projects.
Bank of America-Merrill Lynch said earlier this month that it expects housing metrics to stabilize and, although the bank was hesitant to call a bottom in housing, "the timing may be ripe to get more positive on the home-improvement space."
For the period ended Nov. 1, Home Depot reported earnings of $689 million, or 41 cents a share, down from $756 million, or 45 cents a share, a year earlier. Revenue fell 8% to $16.36 billion as same-store sales dropped 6.9%.
Analysts polled by Thomson Reuters had most recently expected earnings of 36 cents on $16.28 billion in sales.
Gross margin rose to 34% from 33.7%.
The number of customer transactions declined 0.3%, and the average amount spent per transaction dropped 7.1%.
Monday, rival Lowe's Cos. (LOW) said its profit fell 30% as it continued to see weak demand, although the company noted it is seeing signs of stabilization.
Shares of Home Depot closed at $27.65 on Monday and were inactive premarket. They are up 20% this year.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com;