Wednesday, February 16, 2011

Home Depot Inc. (NYSE: HD): Q4 Earnings Preview 2010

Home Depot Inc. (NYSE: HD), the world's largest home improvement specialty retailer, is scheduled to release fourth-quarter earnings before the market open on Tuesday, February 22, 2011. Analysts, on average, expect the company to report earnings of 30 cents per share on revenue of $14.79 billion. In the year-ago period, the company reported earnings of 24 cents per share on revenue of $14.57 billion.

The Home Depot, Inc. is the largest retailer of do-it-yourself merchandise, which includes building materials, home improvement supplies, and lawn and garden products.  The company operates 2,248 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, Mexico and China. The company enjoys a well-known brand name and large customer base. Home Depot has an efficient global product sourcing system which gives it an edge over competitors and independent stores, facilitating its ability to distribute a wide range of innovative products. 

The company's fortunes are closely tied to the housing market. usehold purchases, which make up about 70 percent of the economy, grew at a 4.4 percent annual pace in the fourth quarter, the fastest since the first three months of 2006, Commerce Department figures showed January 28. 

In the preceding third quarter, the Atlanta, Georgia-based company's net income was $834 million, or 51 cents a share, compared with a profit of $689 million, or 41 cents, in the year-ago quarter. Revenue grew 1.4% to $16.6 billion from $16.36 billion. Analysts, on average, had expected the company to report earnings of 48 cents per share on revenue of $16.59 billion. 

In December, the company boosted its fiscal 2010 guidance. Home Depot said that it expects adjusted 2010 earnings of $1.97 a share, growth of 27%, on sales growth of 2.3%, up from its previous forecast of earnings of $1.94 on sales growth of 2.2%. 

For fiscal 2011, it expects sales growth of approximately 2.0%-2.5%, comparable store sales growth of low single digit, earnings per share from continuing operations growth before share repurchases to be approximately 7%-9%, earnings per share from continuing operations growth, after share repurchases of approximately 11%-13%. Home Depot plans to buy back $2.5 billion in stock in 2011. Home Depot plans to add 10 new stores to its 2,246 retail locations across the U.S., Canada, Mexico and China.

At a meeting with investors and analysts in December, Home Depot outlined steps it was taking to boost its online business and improve customer service in a lackluster economy. Home Depot said it will step up its online business and provide store associates with devices that let them answer in-store customer queries faster. The retailer will launch a service next year that allows shoppers to buy online and pick up purchased products in store. Online sales are often more profitable for retailers as they involve less overhead and other costs.

Home Depot Inc. is expanding its spring sales promotions as the home-improvement retailer anticipates brisk business in the coming months. Home Depot is doubling to four from two the number of weekends it will run "Spring Black Friday" promotions in the U.S., compared with 2010. Home Depot will hire more than 60,000 temporary employees to bolster its staff for the spring.

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