Executive Briefings

Inventory Controls Boost Home Depot's Economic Performance

Investors may be looking to improved performance by home-improvement retailers as a barometer of the economy, but those results may say more about the retailers than about consumers.
First came the recent announcement from Lowe's that its first-quarter earnings per share reached 32 cents, which far exceeded expectations. Along with CEO Robert Niblock's suggestion that the worst may be over in the housing market, the results helped send the Dow Jones average up. Now, Home Depot has beaten analyst expectations with quarterly earnings up 44 percent, including restructuring charges, to $514m. But if you read between the lines, it becomes clear that anyone betting on a near-term economic recovery shouldn't hold their breath.
Home Depot's numbers were largely a function of improved expense and inventory controls, part of its restructuring under CEO Frank Blake, rather than a true pickup in demand. Store revenues declined 10.2 percent, compared with sales from stores that were open during the same period last year.
Source: Fortune

Investors may be looking to improved performance by home-improvement retailers as a barometer of the economy, but those results may say more about the retailers than about consumers.
First came the recent announcement from Lowe's that its first-quarter earnings per share reached 32 cents, which far exceeded expectations. Along with CEO Robert Niblock's suggestion that the worst may be over in the housing market, the results helped send the Dow Jones average up. Now, Home Depot has beaten analyst expectations with quarterly earnings up 44 percent, including restructuring charges, to $514m. But if you read between the lines, it becomes clear that anyone betting on a near-term economic recovery shouldn't hold their breath.
Home Depot's numbers were largely a function of improved expense and inventory controls, part of its restructuring under CEO Frank Blake, rather than a true pickup in demand. Store revenues declined 10.2 percent, compared with sales from stores that were open during the same period last year.
Source: Fortune