Charlotte, NC, Apr. 26--Home Depot Inc. Chief Financial Officer Carol Tome reiterated the home-improvement giant's forecast that earnings will grow 10% to 14% this fiscal year, excluding the impact of an accounting change.
Including the impact of the change, per-share earnings will rise 7% to 11% on 9% to 12% sales growth, Tome said during a presentation at a Lehman Brothers conference that was broadcast on the Internet. The sales forecast assumes stores open for less than a year will generate 6% sales growth, while sales at comparable stores will grow 3% to 6%, she said. Home Depot still plans to open 175 stores this year, including two in Manhattan.
Based on that guidance, the Atlanta retailer would earn $2.07 to $2.14 a share, before items, on sales of about $70.65 billion to $72.6 billion, or $2.01 to $2.09 including the accounting change. Analysts, on average, forecast earnings of $2.09 a share on sales of $72.1 billion, according to Thomson First Call.
With more than 1,700 stores already, Home Depot still has plenty of room to grow, Tome said. Asked whether the home-improvement market is becoming saturated, Tome said Home Depot estimates $900 billion in market opportunity for sales to the do-it-yourself customer, the do-it-for-me customer, professionals such as contractors, and international customers. Home Depot only has a 10% share of that market now, she said.
"Saturation is nothing more than a frame of mind," she said. "There is plenty of growth left for the Home Depot."
Another questioner asked how Home Depot can grow in the face of rising interest rates. "We see no direct correlation between interest rates and our sales--period," she said. "We are much more tightly correlated with consumer confidence. We're also tightly correlated with housing turnover, and housing turnover remains strong."
