Home Depot profit rises on better sales

A customer pushes a cart with supplies at the Home Depot store on August 16, 2011 in the Hollywood section of Los Angeles, Calif.
Kevork Djansezian/Getty Images

(AP) ATLANTA - Better sales in the U.S. and healthy demand for its mainstay home-improvement products helped Home Depot's (HD) net income rise 13 percent in its fiscal second quarter.

The world's biggest home-improvement retailer also boosted its full-year earnings outlook Tuesday, citing its performance so far this year.

For the quarter that ended July 29, Home Depot Inc. earned $1.53 billion, or $1.01 per share. A year earlier it earned $1.36 billion, or 87 cents per share.

The latest results topped the 97 cents per share that analysts polled by FactSet expected.

Revenue climbed to $20.57 billion from $20.23 billion, up 2 percent. But Wall Street expected higher revenue of $20.74 billion.

Revenue at stores open at least a year increased 2.1 percent. For U.S. stores, the figure rose 2.6 percent.

This metric is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.

Chairman and CEO Frank Blake said in a statement that sales of seasonal items, like gardening products, began in the first quarter because of the warm winter and slowed a bit in the second quarter. But demand for core products continued.

Home-improvement retailers have managed to keep customers coming to their stores in part because of the slow-to-recover housing market. Homeowners who have been hesitant to sell while home prices have been deflated have instead focused on smaller, do-it-yourself projects.

Now that the housing market is beginning to recover slightly, home prices are climbing somewhat and construction is on the rise. This will help the home improvement market, as contractors head in for supplies. Confidence in the housing market also may mean homeowners will be willing to spend more on home-improvement projects, such as redoing a kitchen or bathroom.

Looking ahead, Home Depot now expects fiscal 2012 earnings of $2.95 per share. It previously predicted $2.90 per share. The Atlanta company still anticipates a 4.6 percent rise in revenue, implying revenue of $73.63 billion.

Analysts foresee earnings of $2.92 per share on revenue of $73.95 billion.

Home Depot runs more than 2,200 stores in the U.S. and around the world. Its smaller rival Lowe's Cos. reports its earnings Monday.