updated 8/17/2004 9:05:49 AM ET 2004-08-17T13:05:49

The Home Depot Inc. reported a nearly 19 percent jump in second-quarter profit on record sales as it benefited from strong performance in stores open at least a year. It also raised its earnings guidance for the year.

The results, released Tuesday, handily beat Wall Street expectations.

The nation's largest home improvement store chain said it earned $1.55 billion, or 70 cents a share, in the three months ending Aug. 1, compared to a profit of $1.30 billion, or 56 cents a share, in the same period a year ago.

Excluding the effect of an accounting change, Home Depot said it earned $1.57 billion, or 71 cents a share, in the quarter. Analysts surveyed by Thomson First Call were expecting earnings of 64 cents a share.

Revenue in the second quarter was $19.96 billion, an 11 percent increase from the $17.99 billion recorded a year ago.

"For the first time in our company's 25-year history, we achieved $20 billion in sales in a single quarter," chief executive Bob Nardelli said. "This achievement demonstrates that our knowledgeable associates are delivering on our company's core purpose: to improve everything we touch."

Home Depot raised its full-year earnings growth guidance from 10 percent to 14 percent, to 14 percent to 17 percent. It reiterated its previous full-year sales growth guidance of 10 percent to 12 percent.

Home Depot said comparable store sales increased 4.8 percent in the quarter, the number of customer transactions increased 2.6 percent and the average sales ticket rose 8.2 percent to $54.73.

Home Depot has worked in recent months to improve customer service with more product knowledge training for employees. It also has been looking to expand beyond its traditional markets.

In June, Home Depot said it plans to expand into China, which offers the company a chance to tap into a nearly $50 billion home improvement market. The company has not said how many stores it plans to open there or when it will open its first store in China.

For the first six months of the year, Atlanta-based Home Depot said it earned $2.64 billion, or $1.18 a share, compared to a profit of $2.21 billion, or 96 cents a share, in the year-ago period. Six-month revenue was $37.51 billion, a 13.3 percent increase from the $33.10 billion recorded a year ago.

At the end of the second quarter, Home Depot operated 1,788 stores in the United States, Canada and Mexico. It has 300,000 employees.

The earnings news follows Monday's announcement by Home Depot's chief rival, Mooresville, N.C.-based Lowe's Cos. Inc., that it had an 18 percent jump in second-quarter income. Lowe's also boosted its earnings outlook based on what it called continuing strength in the nation's housing market.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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