By Dhanya Skariachan
NEW YORK (Reuters) - Home Depot Inc
The world's largest home improvement retailer reported higher-than-expected quarterly results on Tuesday and said it saw strength across the United States, its largest market, with same-store sales up in 49 of the 50 states.
Even two states that were hit especially hard by the housing crisis, Florida and California, performed in line with overall U.S. results, it said.
"The overall picture is one of a stabilizing business," Chief Executive Frank Blake said on a conference call. "This is a source of some confidence for 2011 because it is occurring despite the continued weakness of the housing markets."
Stifel Nicolaus' David Schick wrote that the strong same-store sales bolster Blake's argument that "the business is not as tied to pure housing as it is to the broader economy."
The Home Depot news came the same day that a closely watched survey, the S&P/Case Shiller composite index, showed U.S. single-family home prices fell for the sixth month in a row in December, in line with expectations. Home Depot rival Lowe's Cos Inc
Home Depot shares, which have risen about 25 percent in the past three months, were off 30 cents or 0.8 percent at $38.19 in early afternoon.
Sales at Home Depot stores open at least a year rose 3.9 percent globally in the fourth quarter ended January 30, and increased 4.8 percent in the United States.
The company reported a 2.6 percent rise in the average ticket -- average spending per customer per visit -- with strong sales in its kitchens and appliances segments. This cheered investors who have long been looking for an uptick in demand for expensive projects.
U.S. consumers have been selectively spending on repairs and small remodeling projects. In recent months, Home Depot has shifted focus to cheaper products like faucets and paint to increase traffic in its stores.
"Our read is that the U.S. consumer is coming back," Chief Financial Officer Carol Tome said in an interview. "We just reported the first year of positive sales growth since 2006. So I would say it's early days."
Tome expects sales growth to be stronger in the second half of the fiscal year than in the first half.
Bernstein analyst Colin McGranahan said he was encouraged by the sales momentum but said it was "way too early" to say the U.S. consumer is back.
"We will see what Lowe's has to report. We only have half the picture so far," he said.
"I was surprised by sales this quarter," said Thomas Villalta, a portfolio manager at the Jones Villalta Opportunity Fund in Austin, Texas, which owns Home Depot shares. "Sales beat the consensus with relatively difficult comparisons..."
"The upward movement in average ticket (to $51.31 from $50.01) is significant in my view," Villalta added.
SALES RISE, COSTS FALL
Home Depot's net income rose to $587 million, or 36 cents a share, in the fourth quarter, from $342 million or 20 cents a share a year earlier.
Analysts on average were expecting 31 cents a share, according to Thomson Reuters I/B/E/S.
Sales rose 3.8 percent to $15.13 billion, beating expectations of $14.81 billion, while total operating costs fell 1.9 percent.
The company boosted its quarterly dividend by 6 percent to 25 cents a share.
It said it now expects a 2011 profit of $2.20 a share, excluding future share repurchases, up from a prior forecast of $2.01. It expects sales to rise 2.5 percent, up from an earlier forecast of 2 percent to 2.5 percent.
Some investors lauded the company's efforts to keep tight controls on costs. Under Blake, Home Depot has closed secondary store chains and upgraded service and products in its core retail business to retake market share from Lowe's. Blake is credited with returning Home Depot's focus to being a regular big-box, strip-mall type store. (Reporting by Dhanya Skariachan; Editing by Maureen Bavdek, John Wallace and Matthew Lewis)
