By MAE ANDERSON, Associated Press
NEW YORK (AP) — Home Depot Inc. said Tuesday that its fiscal fourth-quarter net income rose 32 percent as homeowners spent more on renovation projects in part due to the mild weather in the U.S.
Coping with prolonged weakness in the housing market, home-goods sellers like Home Depot have adjusted to the fact that fewer consumers are making large-scale home renovations by cutting costs and improving services such as online shopping.
But the sales increase at the largest U.S. home-improvement retailer shows there may be pent-up demand for home improvement, even during the winter, and it offers a glimmer of hope amid the housing slump.
Last week, the Commerce Department said builders broke ground on a seasonally adjusted annual rate of 699,000 homes in January; a number that nearly matches November's three-year high.
At Home Depot, top-performing categories included tools, electrical supplies, building materials, paint, lumber, lighting, outdoor garden products and flooring.
"Warmer-than-expected weather encouraged customers to tackle exterior projects," the company's executive vice president of merchandising, Craig Menear, said during a call with analysts. "Our merchants reacted quickly to this opportunity and worked alongside our stores and suppliers to leverage our supply chain and drive results."
That helped categories such as gutters, roofing, vinyl siding and patio furniture, more than offsetting weakness in typical winter categories such as snow removal, fireplaces and portable heating, the Atlanta company said.
Total transactions rose 3.6 percent while the average amount a customer spent rose 2.4 percent. The number of customers who spent less than $50 rose 1.3 percent and the number of customers who spent more than $900 rose 3 percent. Each of those categories make up about 20 percent of Home Depot's sales.
The company said it earned $774 million, or 50 cents per share, for the period that ended Jan. 29. That's up from $587 million, or 36 cents per share, a year earlier. Quarterly revenue increased 6 percent to $16.01 billion.
Analysts on average expected earnings of 42 cents per share and revenue of $15.5 billion, according to FactSet.
Home Depot's shares rose 77 cents to $47.48 in morning trading.
Quarterly revenue at its stores that have been open at least a year climbed 5.7 percent. For U.S. stores, the figure rose 6.1 percent. This is a key gauge of a retailer's health because it excludes results from stores that recently opened or closed.
Home Depot managed its costs well in the quarter, as cost of sales climbed slightly to $10.42 billion from $9.88 billion.
For the fiscal year, Home Depot's earnings increased 16 percent to $3.88 billion, or $2.47 per share, from $3.34 billion, or $2.10 per share, in the prior year. Annual revenue rose 4 percent to $70.4 billion from $68 billion.
The Atlanta company forecasts 2012 earnings of about $2.79 per share, after expected stock buybacks. It predicts its revenue will climb 4 percent, implying a total of $73.2 billion, including an extra week in the fiscal year.
Analysts foresee earnings of $2.76 per share and revenue of $72.47 billion for the year.
Home Depot had 2,252 stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces, Mexico and China at the end of the fourth quarter.
Home Depot's smaller rival, Lowe's Inc., plans to report its results on Monday.
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