By Paul Ziobro And Chelsey Dulaney
Home Depot Inc. reported strong sales growth helped by healthy
spending among wealthier Americans in an improving housing
market.
Sales rose 6.1% at stores open for more than a year, including
7.1% in the U.S., in the first quarter, sending earnings 15% higher
for the period. The company increased its sales and profit forecast
for the year.
Chief Financial Officer Carol Tome said that about half of Home
Depot shoppers live in homes valued above $200,000 which have
experienced a stronger recovery over the last six years than those
in low-income households.
"The nature of our customer base is helping drive this growth,"
Ms. Tome said.
In a weak retail environment, home improvement stores like Home
Depot remain an outlier with consumers showing more of a
willingness to spend money replacing windows and upgrading
countertops than to splurge on fashion and everyday goods. Wal-Mart
Stores Inc. Tuesday reported a scant 1.1% same-store sales growth
at U.S. stores in the first-quarter, and other retailers like
Macy's Inc. and Kohl's Inc. have reported weak sales in the first
months of the year.
Recent government data has fueled optimism that the housing
market is picking up after a slow winter. U.S. housing starts rose
20% in April to a seasonally adjusted annual rate of 1.14 million,
the highest level since November 2007. New applications for
building permits, which shed a light on construction over the
coming months, rose 10.1%.
Home Depot's sales are being driven by more people coming into
its stores, as the number of transactions rose 4.6% in the period.
Average ticket rose 1.8% to $58.60. Online sales grew 30% in the
quarter, but remain a small fraction of the company's total sales
which grew 6.1% to $20.9 billion.
Overall, the company reported earnings of $1.58 billion, up from
$1.38 billion, a year earlier. Results were helped by a $71 million
tax audit settlement.
Home Depot also has had to contend with the aftermath of a
widespread data breach last year. The company has said it faces
several dozen civil suits in the issue in which millions of
customers' credit-card information and emails were stolen. To
combat future thefts, the company has completed a project to
encrypt credit-card data at the point of sale.
The company's first-quarter results included $7 million in
breach-related costs, though Home Depot said it can't yet estimate
the full scope of costs related to the breach.
Write to Paul Ziobro at Paul.Ziobro@wsj.com and Chelsey Dulaney
at Chelsey.Dulaney@wsj.com
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