Home Depot sees big jump in profit

ATLANTA — The Home Depot said a nearly 39 percent jump in fourth-quarter profit is proof its strategy to pump billions into retraining employees, improving customer service and renovating its stores is working.

The chief of the nation's largest home improvement store chain also indicated he is not worried about changes in the economy or housing market.

The earnings, announced Tuesday, beat Wall Street expectations and grew faster than the quarterly profit reported a day earlier by Home Depot's chief rival, Lowe's Cos. Inc.

Home Depot said it earned $951 million, or 42 cents a share, for the three months ended Feb. 1 compared to a profit of $686 million, or 30 cents a share, in the same period a year ago.

Analysts surveyed by Thomson First Call were expecting earnings of 39 cents a share.

Sales in the quarter were $15.13 billion, compared to $13.21 billion in the year-ago period. Same-store sales — a measure that compares sales at stores open at least a year — increased 7.6 percent in the quarter.

"If you're in retail, there's no sweeter spot to be in than home improvement," chief executive Bob Nardelli told reporters during a question-and-answer session. "We see a tremendous runway for growth going forward."

Nardelli said the Atlanta-based company is attentive to possible downturns in the economy and housing market, but he believes the 1,707-store chain can sustain its rapid pace of growth in the future. The company plans to add 175 more stores in 2004.

"At this point, we continue to stay straight on strategy," he said.

In a conference call with investors, Nardelli said the company has made particular gains in several key markets, including Baltimore, Cleveland and Washington. But, he also acknowledged that there are more improvements that can be made. One area is increasing the average amount of money Home Depot takes in on each sales ticket.

"We're not even close to realizing our growth potential over the longer term," Nardelli said.

On Monday, Home Depot rival Lowe's reported a 28 percent rise in profit to $407 million for the three months ended Jan. 30.