NEW YORK — Hot weather kept gardeners indoors and economic uncertainty still had professional builders holding back during the second quarter, Home Depot said Tuesday.
But a modest revenue increase helped the nation’s largest home-improvement retailer’s net income to rise 7 percent.
Home Depot Inc. trimmed its revenue forecast due to lower sales expectations for the second half of the year, but it said sales so far in August have improved over July sales.
CEO Frank Blake said the company continues to see weakness in the professional segment and softer housing-related activity than predicted.
Those factors and the generally weak economy “counsel caution as we enter the back half of the year,” he said in a call with analysts.
“Instead of significant sequential improvement from the first half to the back half, we now think that the two halves (of 2010) will be similar, after adjusting for commodity price inflation,” Blake said.
Small repair and maintenance projects and simple decor continue to be the biggest sales drivers, the company said.
Rival Lowe’s Cos. cut its revenue forecast Monday, saying shoppers remain cautious. Home sales have declined after getting a boost from tax credits that expired at the end of April. Homebuyer tend to spend on items such as new appliances or paint soon after moving in.
Quarterly net income rose to $1.19 billion, or 72 cents per share, from $1.12 billion, or 66 cents per share last year. Analysts polled by Thomson Reuters, on average, expected 71 cents per share.
Revenue rose 2 percent to $19.41 billion from $19.07 billion last year. Analysts predicted $19.59 billion.
Revenue at stores open at least one year rose 1.7 percent worldwide and 1 percent in the U.S. It was the third consecutive quarter of gains for the key measure worldwide and the second consecutive quarter in the U.S.
Revenue at stores open at least a year is a key indicator of a retailer’s performance because it excludes growth at stores that open or close during the year.
Geographically, Florida and California continued to show improvement but the Pacific Northwest, particularly Portland and Seattle, were weaker.
The best-performing categories were lumber, electrical, lighting, plumbing, paint and hardware. Millwork, seasonal products and building material were weaker.
The average ticket remained flat at $52.30. Tickets of $900 or more, about 20 percent of Home Depot’s business, were down 5 percent during the quarter. Tickets under $50, also 20 percent of Home Depot’s business, rose 2.4 percent.
The heat in much of the country over the quarter drove sales of grills and air conditioners but kept gardeners inside, the company said.
Home Depot trimmed its revenue outlook to a 2.6 percent increase, from a 3.5 percent rise. That implies revenue of $67.9 billion. Analysts expect revenue of $68.21 billion.
The company raised its earnings forecast to account for share repurchases. It now expects net income of $1.90, up from prior guidance of $1.88 per share. Analysts expect $1.89 per share.
Shares rose 93 cents to $28.31 on Tuesday.
