Home Depot Inc. (Atlanta) posted an 18 percent increase in net income for its first quarter ending May 5, 2013. The profit topped analysts’ estimates and raised the home improvement retailer’s forecast for earnings this year.
Revenue rose 7.4 percent and the average customer purchase increased 5 percent, to $57.24. Same-store sales rose 4.3 percent, including a 4.8 percent gain in the U.S.
Much of the credit for the retailer’s strong showing was awarded to a housing rebound that has boosted renovation spending, as rising U.S. home prices are giving homeowners the confidence to start projects and spend more.
Residential real-estate prices rose in February by the most since May 2006, with the S&P/Case-Shiller index of house values in 20 cities up 9.3 percent from a year ago.
The gains were all accomplished with little or no store expansion in the past five years, noted one analyst, Brian Gilmartin, portfolio manager at Trinity Asset Management.
Since January 2008, Home Depot has added only about 20 new stores but earnings growth since then is up 35 percent, driven by operating margin gains from reduced store expenses and better cash flow from lower capital expenditure spending.
Gilmartin said Home Depot’s self-checkouts in particular helped keep a lid on expenses.