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Home Depot sees rosier year ahead

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POSTED: August 17, 2012 6:00 p.m.

ATLANTA — The Home Depot Inc. is feeling more optimistic about the recovery of the housing market after customers spent more on remodeling and repair projects in the second quarter.

The country’s biggest home-improvement retailer said Tuesday that stronger sales of paint, bath accessories and kitchen installations helped lift its net income by 12 percent during the period. Lower costs also contributed to the improved results.

The Atlanta-based company boosted its full-year earnings outlook, citing its performance so far this year.

Chairman and CEO Frank Blake noted in a conference call with investors that some of the strongest growth came from the markets that were hit hardest in the downturn, such as California and Florida.

When the housing market is weak, companies such as Home Depot struggle because new construction slows and contractors don’t spend as much on supplies. Homeowners also pull back on projects, such as kitchen or bathroom renovations.

In the latest quarter, however, Home Depot said it saw signs of improvements in key areas. Overall, revenue at stores open at least a year rose 2.1 percent. In the U.S., where the majority of Home Depot’s stores are located, the figure rose 2.6 percent. The metric is a key gauge of a retailer’s health because it strips out the impact of recently opened or closed locations.

 

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