Atlanta — Effective management of expenses and inventory helped The Home Depot grow profits 44 percent last quarter despite a 10 percent decline in sales.
Net earnings were $514 million and sales totaled $16.2 billion for the three months ended May 3, while U.S. same store sales fell 8.6 percent.
Earnings reflect the closing of the company’s Expo Design Center stores, which boosted year-over-year comparisons. On an adjusted basis, net earnings declined 18 percent to $587 million.
“Our markets, and the consumer in general, remain under pressure,” said chairman/CEO Frank Blake. “But we continue to make progress on improving our business as evidenced by stronger customer satisfaction ratings.”
Retail analysts agreed. “We believe [Home Depot’s] results are actually very strong and reflect a company that is effectively managing through the challenging macro [economic environment] and maintaining a disciplined approach to SG&A [selling, general and administrative costs], inventory, and capital allocation,” observed Credit Suisse analyst Gary Balter in a research note.
Looking ahead, the world’s largest home improvement chain reaffirmed a projected 9 percent sales decline for the balance of its fiscal year, with negative comparable store sales in the high single digits.
Home Depot operates 2,238 retail stores worldwide and 1,973 locations in the U.S. including Puerto Rico, the U.S. Virgin Islands and Guam.