Atlanta, GA, September 6, 2006--Home Depot expects growth in its average purchase to slow as customers pressed by higher interest rates take on fewer costly projects such as kitchen renovations, the company's finance chief said on Wednesday.
"What we are seeing is a movement away from some of those bigger-ticket discretionary projects to the repair-and-remodel activity," chief financial officer Carol Tome said at a Goldman Sachs retail conference in a session carried over the Internet.
"We'll still have average ticket growth because we are bringing in innovative and distinctive products, but that tremendous acceleration we've had over the past several years will start to slow," Tome added.
Last month, Home Depot said profit and sales this year would rise at the low end of its previous projections, and added it would spend $350 million in the second half on stores to refresh products and boost staffing in a bid to gain market share as U.S. home sales slow down.
Staff cuts at Home Depot's Atlanta headquarters are helping to fund the store investments, Tome said.
Earlier this year, Home Depot forecast a 14 percent to 17 percent rise in sales and a 10 percent to 14 percent increase in per-share earnings.
Home Depot also plans to spend more next year on its retail stores, which account for 87 percent of total sales.
This year, Home Depot's capital spending is set for $3.8 billion, with 95 percent focused on retail stores. Next year, capital spending is expected to top that amount, again with 95 percent devoted to the stores, Tome added.
She also said Home Depot planned to increase labor hours in its stores next year, especially as it ramps up for the busy spring season.
As new-store growth slows, Home Depot is looking to boost sales to home builders and other contractors. Earlier this year, it bought construction materials distributor Hughes Supply to move into faster-growing professional markets.
