Home Depot reports profit jump, but sales disappoint

<p>Weak demand for flooring and seasonal products were partly to blame for The Home Depot Inc.'s disappointing retail sales in the first quarter, though it still reported a 19 percent jump in profit and reaffirmed its growth guidance for the year Tuesday.</p><p>Shares of its stock, which has lagged behind rival Lowe's Cos. of Mooresville, N.C., fell more than 5 percent on the news.</p><p>"Our stock price is a conundrum, but rather than spending a lot of time stewing about that, we focus on growing the business," Chief Financial Officer Carol Tome said in an interview.</p><p>The nation's largest home improvement store chain said it earned $1.48 billion, or 70 cents a share, for the three months ending April 30, compared with a profit of $1.25 billion, or 57 cents a share, for the same period a year ago.</p><p>Analysts surveyed by Thomson Financial were expecting earnings of 67 cents a share.</p><p>Revenue in the first quarter rose 13.1 percent to $21.46 billion, compared with $18.97 billion recorded in the same period a year ago. The recent quarter's figure was slightly below the $21.63 billion in revenue analysts expected.</p><p>In a conference call with analysts and investors, Bob Nardelli, Home Depot's chief executive, said he was disappointed with the company's overall retail sales in the quarter. He said there was weakness in sales of seasonal items and flooring, the latter being a historical driver of Home Depot's installation business.</p><p>Even so, the Atlanta-based company reaffirmed its sales and earnings-per-share growth guidance for 2006 and beyond. It still expects 2006 sales will grow in the range of 14 percent to 17 percent and earnings per share will grow between 10 percent and 14 percent, Tome said.</p><p>The company acquired Hughes Supply _ a distributor of construction, repair and maintenance products _ in the first quarter, and that company's results are included in Home Depot's consolidated results for the final month of the quarter.</p><p>For comparability purposes, The Home Depot said it will no longer report sales at stores open at least a year, a key retail barometer also known as same-store sales, but will now report total sales growth for both of its segments as a percentage change over the prior period.</p><p>The company said it increased its average sales ticket in the first quarter by 4.3 percent to $60.75.</p><p>Home Depot operates 2,051 stores in the United States, Canada and Mexico. It also has announced plans to expand to China, but has repeatedly refused to say how many stores it will open there or when it will open its first one. CEO Nardelli declined to answer the question directly when asked Tuesday.</p><p>"We believe we will be in China," Nardelli said.</p><p>Home Depot completed its $3.2 billion purchase of Hughes Supply Inc. in late March.</p><p>The deal, announced Jan. 10, called for Home Depot to pay $46.50 per outstanding share for Orlando, Fla.-based Hughes Supply and assume $325 million in debt.</p><p>The deal, Home Depot's largest acquisition ever, doubled the size of The Home Depot Supply division, which serves business customers, such as homebuilders, professional contractors, municipalities and maintenance professionals.</p><p>Hughes Supply has more than 500 locations in 40 states.</p><p>In part because of the acquisition, Home Depot said its Home Depot Supply division saw its sales jump to $2.13 billion in the first quarter, compared with $657 million in the year-ago period. It saw the segment's operating profit jump to $149 million in the quarter, compared with $28 million in the same period a year ago.</p><p>Home Depot shares fell $2.05, or 5.1 percent, to close at $38.45 in trading Tuesday on the New York Stock Exchange. The stock has traded in a 52-week range of $36.43 to $43.98.</p><p>___-</p><p>On the Net:</p><p>HASH(0x1d024b8)</p>

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