Home Depot Profit Up 19%; Sales Disappoint

Home Depot Inc. said Tuesday that fiscal first-quarter profit rose 19% on demand for building supplies and appliances. The shares had the biggest drop in almost three years after sales missed analyst estimates.

Net income climbed to $1.48 billion, or 70 cents a share, from $1.25 billion, or 57 cents, a year earlier, the Atlanta-based retailer said. Revenue in the period ended April 30 gained 13% to $21.5 billion.

The average estimate of analysts surveyed by Thomson Financial was for earnings of 67 cents on sales of $21.53 billion.

Chief Executive Robert Nardelli said he was “disappointed” with retail sales in the quarter, particularly flooring and seasonal products such as lawn mowers. The company’s appliance market share rose.

Nardelli purchased Hughes Supply Inc. for $3.44 billion in March to expand offerings to contractors and insulate Home Depot from a decline in the housing market. The retailer’s professional supply unit contributed 10% of revenue in the quarter, compared with 3.5% a year earlier.

Nardelli attributed some of the weakness in retail sales to bad weather.

Home Depot affirmed its forecast that sales would grow as much as 17% this year and earnings per share would rise as much as 14%.

Analysts estimate Home Depot will earn $3.07 a share this year. The company earned $2.72 a share last year.

Home Depot shares fell $2.05 or 5.1%, to $38.45. They have dropped 5% this year, while rival Lowe’s Cos. has declined 6.2%.