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Home Depot's small-ticket sales make gains in 3Q

Retail Editor 7 -- Home Textiles Today, November 16, 2010

Atlanta - Even though sales of small-ticket goods continued to outpace larger-ticket purchases, the third quarter at The Home Depot marked the fourth consecutive period of positive comps overall and the third quarter in a row for positive comps for the U.S.

Chairman and ceo Frank Blake outlined some of Home Depot's other quarterly highlights during the 1,976-unit chain's earnings call this morning.

At the crux is the "stabilizing" of the company's overall business, particularly in the U.S. Home Depot also operates stores in Canada and Mexico.

"In the U.S., more than 80% of our top 40 markets positively comped," he said. "Compared to prior quarters, the variability of performance has narrowed so that we see less dramatic swings on the positive and on the negative side...From an overall perspective, we see a stabilizing business. And as the business stabilizes, we continue to improve our operational performance."

Also, the third quarter was a period of improved inventory turns and continued growth in transactions.

However, average ticket "continues to be a challenge just as the macro-housing environment remains under pressure."

Home Depot's third quarter net earnings grew by 21.0% to $834 million, or 51 cents per share. Sales totaled $16.6 billion, up 1.4%. Comps rose 1.4% for the company and 1.5% in the U.S.

Year to date net earnings rose 18.6% to $2.751 billion, or $1.65 per share. Sales increased 2.4% to $52.87.

Comp transactions were up 2.2% in the quarter. But, "as expected," Menear continued, "we have not yet turned the corner on average ticket," which was down 0.8%, or 43 cents, to $51.46.

He noted that smaller-ticket purchases were stronger in the quarter, while the big-ticket purchase remained under pressure. Transactions for tickets under $50, which represent roughly 20% of Home Depot's U.S. sales, were up 2.7% year over year. Transactions for tickets of $900 and above, also approximately 20% of the U. S. business, were down 3.4% in the third quarter.

Home Depot updated its fiscal 2010 guidance and now expects sales to be up approximately 2.2% for the year. The company also expects diluted earnings per share from continuing operations to increase by about 25% to $1.94 for the year.

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