Home Depot released its second quarter profit report that showed it topped estimates made by analysts. The largest home improvement retailer in the United States also announced that it increased its yearly forecast as shoppers spent more on projects.
Net Income in the quarter ended August 4 gained 17 percent to $1.8 billion or $1.24 per share from $1.53 billion or $1.01 per share the previous year. Analysts have estimated $1.21 per share according to a survey made by Bloomberg.
Comparable store sales increased the most in 14 years after Home Depot Chief Executive Officer Frank Blake improved the company’s merchandising and distribution during the housing downturn. The CEO managed to decrease costs as the market suffered a crisis. As home prices go up, consumers spend more. In the second quarter, the average purchase at Home Depot increased 4.3 percent to $57.39.
Home Depot revenue went up 9.5 percent to $22.5 billion. Analysts estimated its revenue to be $21.8 billion. Sales at stores open for at least a year increased 10.7 percent, which is the most since going up 11 percent in the second quarter of 1999.
Profit for the year will be around $3.60 per share, which is up from the initial estimate of $3.52. Analysts have estimated its profit to be $3.64. But even with the positive profits report, Home Depot shares dropped 1.2 percent to $74.29 at the close of trading in New York.
Chief Financial Officer Carol Tome said that sales growth will slow in the last half of the year. The company’s bottom line will be affected by the prices for commodities such as paneling and the slow growth of appliances. Year-earlier sales due to spending on hurricane-related repairs were not anticipated by the company. Home Depot has gained 20 percent so far this year compared to 16 percent increase for the S&P 500 Index.