Sales decline 9.7 percent in first quarter at Home Depot
Home Depot Inc., the world’s largest home-improvement retailer, reported a 9.7 percent drop in first-quarter sales and said consumers remained reluctant to spend as the U.S. housing slump deepened.
Sales fell to $16.2 billion in the three months ended May 3, the Atlanta-based chain said Tuesday in a statement. Net income rose 44 percent to $514 million, or 30 cents a share, from a year earlier after the company trimmed selling, general and administrative costs.
U.S. builders broke ground on the fewest houses on record in April as work on multifamily units plunged, the Commerce Department said Tuesday. Home Depot shuttered its Expo design chain this year and froze base salaries for officers.
Home Depot fell 5 percent in New York Stock Exchange composite trading. The shares jumped 6.6 percent Monday after smaller rival Lowe’s posted results that beat analysts’ estimates.
"What you’re seeing here is an industry where the top two companies are actually strengthening, not weakening their positions during the slowdown," said David Schick, an analyst with Stifel Nicolaus & Co business card design. in Baltimore.
"We are concerned about accelerating rates of foreclosures, particularly in the western part of the country where there is already a high density of houses in foreclosure," Chief Executive Frank Blake said on a conference call.
Sales in stores open at least a year fell 10.2 percent in the quarter. Colin McGranahan, an analyst with Sanford C. Bernstein & Co. in New York, estimated a decline of 11.7 percent. The company reaffirmed its forecast for an annual sales decline of 9 percent.
"This was really a cost-control and expense-reduction quarter," McGranahan said. "Home Depot is reducing costs across the board."
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