Like many retailers, Home Depot Home Depot cited winter weather as one culprit for earnings that didn't measure up to expectations Tuesday.
The home improvement chain recorded net earnings of $1.4 billion, on sales that rose 2.9% to $19.7 billion. Earnings per share of $1.00 were up 20.5% from 83 cents a year ago, but 96 cents when excluding a net gain tied ot selling a piece of the company's stake in HD Supply HD Supply Holdings. The latter figure was shy of the consensus Wall Street call for earnings of 99 cents per share.
"The first quarter was impacted by a slow start to the spring selling season," Chairman and CEO Frank Blake said in Home Depot's earnings release. "But we had solid results in non-weather impact markets and expect our sales for the year to grow in line with the guidance we previously provided."
That guidance calls for fiscal 2014 sales to grow 4.8% from a year earlier. Home Depot also hiked its earnings per share guidance to $4.42 for the year, 17.6% higher than the prior fiscal year and inclusive of $3.75 billion in share repurchases intended for the balance of 2014.
Citi analyst Kate McShane called the retailer's comparable store sales growth, which came in at 2.6% and 3.3% for U.S. stores, "softer than anticipated" in a note Tuesday morning, but said the results were not as weak as feared given quarter's harsh winter weather.
"The reaffirmation of guidance gives us some comfort that spring related sales may have been deferred…and were not lost entirely," McShane added.
Canaccord Genuity analyst Laura Champine expressed similar confidence that the weather impact will only hurt Home Depot in the short term, but warned that the stock is also lacking some of the tailwinds that helped it rally sharply in the past few years.
"Shares are not receiving the strong push from housing market recovery that they had from 2012 to 2013," Champine wrote Tuesday morning. "Recent housing market data suggest momentum is decelerating, including total turnover down for three straight months and home prices declining or flat on a sequential basis for four consecutive months after a year of gains."
Shares of Home Depot fell 1.3% Tuesday morning. Rival Lowe's Cos Lowe's Cos, which is set to report earnings Wednesday, was down 1.1% in pre-market trading. Both stocks have lost more than 8% in 2014.
HD data by YCharts
Follow @SchaeferStreet
No comments:
Post a Comment