Home Depot profits better than expected
The world's biggest home-improvement retailer posts better-than-expected profits in the second quarter despite weaker sales and raises its year long outlook.
BANGALORE (Reuters) -- Home Depot Inc. reported a higher-than-expected quarterly profit on Tuesday as cost cuts partly offset weak sales, and the world's biggest home-improvement chain raised its earnings forecast for the year.
Net profit fell to $1.1 billion, or 66 cents a share, in the second quarter ended on Aug. 2 from $1.2 billion, or 71 cents a share, a year earlier.
Excluding a charge for closing the company's EXPO businesses and a tax benefit, profit at the Atlanta-based retailer was 64 cents a share, above the analysts' average forecast of 59 cents, according to Reuters Estimates.
Sales fell 9.1% to $19.1 billion.
The U.S. housing slump and the recession have curtailed demand for big-ticket remodels that fueled growth at home-improvement chains in recent years.
As sales have slumped, the companies have resorted to aggressive cost cuts to preserve margins.
From freezing officers' salaries to closing certain specialty outlets, from streamlining its supply chain to using less energy in its stores, Home Depot (HD, Fortune 500) has adopted an array of measures to save money. It has also managed inventory tightly.
The company, which shed about 7,000 jobs from the closure of the Expo Design Center chain and other corporate cuts earlier this year, said operating expenses fell 7.5% in the latest quarter.
The results came the day after rival Lowe's Cos Inc. (LOW, Fortune 500) announced plans to rein in its North American expansion plans and gave a dismal outlook for the current quarter as consumers put off big renovations.
For the full fiscal year, Home Depot said it expected earnings per share from continuing operations to be flat to up 7%, compared with its prior forecast of flat to a decline of 7%.
Excluding special items, it expects earnings per share from continuing operations to fall by 15% to 20%. It had earlier seen a decline of 20% to 26%.
Home Depot said it still expected sales to fall by about 9% this year.
In June, Home Depot said economic indicators signaled the worst of the U.S. housing correction had passed. It also raised its fiscal-year profit forecast as it expected improved operational efficiencies to boost margins this year.
From improving its distribution network to targeting more marketing campaigns to Hispanic communities, Home Depot has been stepping up efforts to win back market share from Lowe's.
Shares of Home Depot were up 1.5% at $26.50 in light premarket trading. 
