HD getting way too excited over good 1st qtr
Other retailers are at least acknowledging warm weather pulled sales forward
Not so with HD
Recent visit saw seasonal aisles full and few customers
Will be checking again
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Home Depot Unveils Strategy Behind Newly Raised Goals By JAMES DETAR, INVESTOR'S BUSINESS DAILY
Posted 04:41 PM ET
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The world's largest home improvement specialty retailer provided more detailed guidance on how it will go about achieving newly lifted long-term growth projections.
On June 6, Home Depot (HD) raised its long-term operating profit margin goal from 10% a year return to 12%, and raised its goal for return on invested capital to 24% from 15%.
Senior VP of Finance Ted Decker said Tuesday at Jefferies Global Consumer Conference: "We know retail is changing faster than any time in history, we're not taking our market position for granted, and we expect constant changes in our space."
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Decker said the company plans to build "new state-of-the-art distribution facilities" to leverage its stores. To that end, Decker projected the company will reinvest $1.5 billion in store development from 2013-15.
During that period, it also plans to spend $1.3 billion on new technology and $700 million to build 36 new stores.
He noted that the company had surprisingly strong results in the first quarter.
"The first quarter of 2012 our business delivered results that exceeded our expectations. Sales finished up 5.9%," Decker said.
In the first quarter, Home Depot's earnings grew 30% vs. the same quarter a year earlier, to 65 cents per share. Sales rose nearly 6% to $17.81 billion as warmer-than-expected weather drove home improvement sales.
The company forecasts sales for the full year, which is 53 weeks this year, to rise 4.6% to about $73.69 billion. Analysts expected $73.97 billion. It projects EPS for the year of $2.90, vs. the Street's view of $2.92.
Home Depot shares rose 1.2% to 52.98. The company sports a 93 Composite Rating, meaning it's performed in the top 7% of all stocks in the past 12 months.
Elsewhere in the Retail/Wholesale-Building Products group, ranked No. 74 of the 197 industry groups that IBD tracks, smaller rival Lowe's (LOW) rose 0.4% to 28.54. Tools, lighting and plumbing supplies distributor W.W. Grainger (GWW) jumped nearly 4% early after being upgraded by BB&T Capital Markets from hold to buy. Its shares rose 4.2% to 189.02.
Shares of Lumber Liquidators (LL), which operates 256 flooring stores in 46 states and Canada and is the top-rated company in the group, rose 4.7% to 33.10. |
