Home Depot Results Top Estimates, Backs FY14 View

(RTTNews) - Home improvement retailer Home Depot Inc. (HD) Tuesday reported higher third-quarter profit, as sales grew over 5 percent, with growth in comparable store sales. Earnings per share, as well as revenues beat analysts' expectations. The firm also reaffirmed its outlook for full year 2014.

"During the quarter we saw strong performance across all geographies led by growth in transactions and continued strength in the core of the store," said Craig Menear, CEO and president.

For the third quarter ended November 2, the company's net earnings increased to $1.54 billion or $1.15 per share from $1.35 billion or $0.95 per share in the previous year.

On average, 27 analysts polled by Thomson Reuters expected earnings of $1.13 per share for the quarter. Analysts' estimates typically exclude one-time items.

The firm said its recent-quarter results reflected a pretax gain on sale of $100 million related to sale of a portion of its equity ownership in HD Supply Holdings, Inc. and pretax net expenses of $28 million related to the firm's data breach.

Net sales for the quarter grew 5.4 percent to $20.52 billion from $19.47 billion in the preceding year, while 23 analysts estimated revenues of $20.47 billion for the period.

Comparable store sales were positive 5.2 percent, and comp sales for U.S. stores were positive 5.8 percent.

At the end of the third quarter, the company operated a total of 2,266 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.

For fiscal 2014, the company still expects earnings per share to grow by 21 percent to about $4.54, and sales growth of 4.8 percent. Analysts now expect earnings of $4.50 per share, on revenue growth of 4.9 percent.

The earnings-per-share guidance includes the benefit of the company's year-to-date share repurchases of $5.74 billion and its intent to repurchase an additional $1.26 billion of shares in the fourth quarter. The guidance also includes an estimate of net breach-related costs of about $34 million for the year.

Home Depot noted that its earnings-per-share guidance for 2014 does not include an accrual for other probable losses related to the breach that cannot be estimated at this time.

The firm is also not able to estimate the costs related to the breach, that may include liabilities to payment card networks for reimbursements of credit card fraud and card reissuance costs, liabilities related to the company's private label credit card fraud and card reissuance.

According to the company, those costs may have a material adverse effect on its financial results in the fourth quarter of fiscal 2014 and/or future periods.

Earlier this month, Home Depot had disclosed additional findings related to the recent breach of its payment data systems. In addition to the previously disclosed payment card data, separate files containing about 53 million email addresses were also taken during the breach.

HD closed Monday's trading at $98.03, down 0.21 percent.