HD: Earnings up, sales down

The much-anticipated first-quarter report for the world's largest home improvement retailer brought some good news for the home improvement industry -- Home Depot beat analysts estimates for profit and sales.

The company this morning posted first-quarter earnings of $514 million, up 44.4% from the same quarter last year. However, comp-store sales declined 10.2%, and declined 8.6% in the United States. Sales were $16.2 billion, down 9.7% from the year-ago quarter.

"Our markets, and the consumer in general, remain under pressure," said Frank Blake, chairman and CEO. "But we continue to make progress on improving our business as evidenced by stronger customer satisfaction ratings."

At the company’s earnings conference on May 19, Blake expressed concerns about “accelerating rates of [home] foreclosures in the West,” particularly in California. This caused negative same-store comps for the company in California, Blake said.

“California was getting better [in the fourth quarter of 2008], and now that’s reversed,” Blake said. “We take that as a cautionary note.”

Home Depot executives also discussed the company’s new advertising campaign, its SAP implementation in Canada, its push into China and the timetable for new RDC rollouts.

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The earnings of 30 cents per share topped expectations from analysts surveyed by Thomson Reuters, who had expected earnings of 29 cents on revenue of $15.86 billion.

The results came one day after rival Lowe's posted sales and earnings declines of 1.5% and 21.6%, respectively.

At the end of the first quarter, Home Depot operated a total of 2,238 retail stores, which included 1,973 Home Depot stores in the United States.