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Home Depot Has Good Q2; Lowe's Low

8/22/2011 12:01:00 AM Eastern

NEW YORK – Home Depot reported higher net
earnings and sales while rival home-improvement
chain Lowe’s reported lackluster results in their fiscal
second quarters.


The Home Depot
reported a 14.3 percent increase
in net earnings, to $1.4 billion,
for its second fiscal quarter,
ended July 31.

Net sales rose 4.2 percent to
$20.2 billion year over year, and
U.S. comp-store sales were up 3.5
percent.

The No. 1 home-improvement
chain attributed the strong results to
a rebound in its seasonal business,
storm-related repairs, and strength
in its core product categories.

Average ticket was up 3.3 percent
to $54.04, and the number of
customer transactions edged up 1.1 percent to 373
million.

“We continue to deliver a strong operating performance
while also investing in customer service and
our merchandising initiatives,” said chairman/CEO
Frank Blake, who also credited “the hard work and
dedication” of the company’s sales associates for the
strong showing.

In a research note, Credit Suisse retail analyst Gary
Balter noted that Home Depot is widening the compsales
and performance gap with No. 2 home-improvement
chain Lowe’s. Balter said Home Depot’s
U.S. comps, higher gross margin and significantly
better expense leverage all contributed to the outperformance.


Lowe’s
reported flat net earnings of $830 million
for its fiscal second quarter, ended July 29.
Sales edged up 1.3 percent to $14.5 billion, well
below the company’s 4 percent
forecast, and same-store sales
slipped 0.3 percent, reflecting
continued macroeconomic
weakness.

“Despite some recovery in our
seasonal business, our performance
for the quarter fell short
of our expectations,” acknowledged
Lowe’s chairman/president/
CEO Robert Niblock. “We
are working diligently to improve
sales and profitability in the nearterm
in a way that we believe will
generate sustained customer preference and shareholder
value. We are also building momentum in 2011
behind our longer-term commitment to deliver even
better customer experiences.”

The earnings results included a charge for evaluating
the carrying value of long-lived assets, including
seven stores that closed on Aug. 14, which reduced
pretax earnings for the quarter by $83 million.

During the quarter Lowe’s opened two stores,
bringing the store count to 1,753 locations in the
U.S., Canada and Mexico as of July 29, for a total of
197.6 million square feet of retail selling space, up 1.5
percent over last year.

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