Home Depot Inc
The world's largest home improvement chain, which has been upgrading service and products in its core retail business to win back market share as Lowe's expands, affirmed its fiscal-year outlook.
On Monday, Lowe's reported better-than-expected quarterly earnings as it saw some strength in outdoor projects during the spring, even though consumers still kept away from major home renovations.
Wall Street Strategies analyst Brian Sozzi said he was disappointed with Home Depot's results, noting that same-store sales were weaker there than at Lowe's.
As U.S. consumers tighten their purse-strings and stay away from big-ticket items, home improvement chains have cut costs aggressively to protect margins.
Earlier this year, Home Depot announced plans to freeze officers' salaries and close certain specialty outlets to save money in the recession and prolonged U.S. housing slump.
The Atlanta-based company, which shed about 7,000 jobs from the closure of the Expo Design Center chain and other corporate cuts earlier this year, said operating expenses fell 16.4 percent in the latest quarter.
LACKLUSTER SALES IN SLUMP
Net profit rose to $514 million, or 30 cents a share, in the first quarter ended on May 3 from $356 million, or 21 cents a share, a year earlier.
Excluding items, the company earned 35 cents a share. Analysts on average were expecting 28 cents, according to Reuters Estimates.
Sales fell 9.7 percent to $16.2 billion. Sales at stores open at least a year, an important measure of retail performance, fell 10.2 percent.
Our markets, and the consumer in general, remain under pressure, Home Depot Chief Executive Frank Blake said in a statement.
On Tuesday, the U.S. Commerce Department said new housing starts and permits fell to record lows in April, denting hopes that the market was stabilizing.
For the full year, Home Depot sees sales down 9 percent, with comparable-store sales falling at a high single-digit percentage rate. It expects earnings per share from continuing operations to decline 7 percent.
Home Depot shares were down $1.34, or 5.2 percent, at $24.68 in morning New York Stock Exchange trading. The stock had risen 6.6 percent on Monday on optimism from Lowe's results.
(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn)