Home Depot on Tuesday reported a fourth-quarter profit that topped analysts’ estimates as shoppers spent more on projects and superstorm Sandy repairs. The company also raised its dividend and approved a $17 billion share buyback.
Net income rose 32 percent to $1.02 billion, or 68 cents a share, from $774 million, or 50 cents, a year earlier, the Atlantabased company said Tuesday in a statement. Excluding a favorable adjustment to a charge to close stores in China, profit was 67 cents a share. Analysts projected 64 cents, the averageof 24 estimates in a Bloomberg survey.
Rising home values are encouraging consumers to spend more on remodeling while the repairs after Sandy spurred demand in the Northeast. The average purchase at Home Depot, the largest U.S. homeimprovement retailer, rose 5.6 percent to $55.46 while the number of customer transactions increased 8.6 percent to 329.1 million, helped by an extra week in the quarter.
“As housing prices have stabilized and started to improve in many regions of the country, homeowners have a propensity to make those bigger-ticket remodeling decisions andpurchases,” John Tomlinson, an analyst at ITG Investment Research in New York, said Tuesday. “Spending on storm recovery is going to be higherticket and stronger than the typical repair for maintaining the home.”
Home Depot said it plans to repurchase $17 billion of stock by the end of its fiscal 2015. The company also increased its quarterly dividend 34 percent to 39 cents a share, payable March 28 to shareholders of record March 14.
Home Depot shares rose $3.64 to close Tuesday at $67.56. The shares gained 36 percent in the 12 months through Monday, compared with a 32percent gain for Lowe’s Cos., the second-largest U.S. homeimprovement retailer.
Home Depot on Monday followed Lowe’s in forecasting profit for the current fiscal year that trailed analysts’ estimates. Home Depot said profit this year will be about $3.37 per share, while analysts estimated $3.49, on average.
Lowe’s said Monday that profit this year will be about $2.05 a share. Analysts’ estimated $2.10. Spending on store improvements and hiring will weigh on the Mooresville, N.C.-based company’s earnings in 2013, Chief Financial Officer Robert Hull told analysts during a conference call.
Business, Pages 24 on 02/27/2013