NEW YORK — Home Depot Inc.’s fiscal first-quarter net income surged 41 percent as shoppers snatched up seasonal items and the number of customer transactions rose.
This is a positive sign for the No. 1 U.S. home improvement retailer, as consumers cut back on home-improvement projects during the recession and housing slump, and Home Depot responded to those weak sales by scaling back store openings and cutting jobs.
With results getting better, Home Depot boosted its 2010 profit forecast above Wall Street’s expectations today and raised its sales outlook as well.
The comeback in the home-improvement business was also fueled by government stimulus programs, including tax credits for home purchases and rebates for energy-efficient products.
The Atlanta company earned $725 million, or 43 cents per share, for the period ended May 2. That compares with $514 million, or 30 cents per share, a year ago.
Adjusted profit was 45 cents per share, which accounts for $33 million related to the extension of its guarantee of a third-party senior secured loan.
Revenue rose 4.3 percent to $16.86 billion from $16.18 billion. Revenue at U.S. stores open at least a year climbed 3.3 percent, while revenue at all of the retailer’s stores open at least a year increased 4.8 percent.
This figure is a key indicator of a company’s health because it measures results at existing stores rather than newly opened ones.
Analysts polled by Thomson Reuters, whose estimates normally remove one-time items, expected a smaller profit of 40 cents per share on revenue of $16.37 billion.
Home Depot boosted its fiscal 2010 forecasts as well. The company now predicts earnings of about $1.88 per share, up from a prior prediction of $1.79 per share. It anticipates sales will climb about 3.5 percent. The retailer’s previous forecast was for an approximately 2.5 percent increase.
Wall Street expects net income of $1.87 per share on revenue of $68.14 billion for the year.
Yesterday, rival Lowe’s Cos. reported a 2.7 percent increase in its first-quarter net income and lifted its full-year outlook, but the guidance was short of analysts’ estimates.
Home Depot ran 2,244 retail stores at quarter’s end.