FILE - In a Nov. 14, 2011 file photo a truck pulls out of the parking lot at a Home Depot store in Oklahoma City. Better sales in the U.S. and healthy demand for its mainstay home-improvement products helped Home Depot's net income rise 13 percent in its fiscal second quarter the company reported Tuesday Aug. 14, 2012. (AP Photo/Sue Ogrocki)
FILE - In a Nov. 14, 2011 file photo a truck pulls out of the parking lot at a Home Depot store in Oklahoma City. Better sales in the U.S. and healthy demand for its mainstay home-improvement products helped Home Depot's net income rise 13 percent in its fiscal second quarter the company reported Tuesday Aug. 14, 2012. (AP Photo/Sue Ogrocki)
ATLANTA (AP) ? 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.
"These are encouraging signs of stabilization in the housing market," Blake said.
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.
Sales of spray paint, laminated flooring and area rugs saw double-digit sales growth, the company said. Sales of paint, bath accessories, special order carpeting, window treatments and wood flooring also improved.
Transactions of $900 or more, which make up about 20 percent of U.S. sales, rose 3.4 percent in the quarter, as appliance, kitchen and flooring sales increased. Transactions of $50 or less, which also make up about 20 percent of sales, were down 0.7 percent.
The company attributed the decline to the warm winter, which it said pulled sales of seasonal items, such as gardening products, into the first quarter.
Home Depot's total operating expenses also eased to $4.46 billion during the quarter, down 3 percent from a year ago. The improvement was partly the result of a new regulation that caps the amount banks can charge retailers when customers pay with debit cards.
In the second half of the year, however, Home Depot expects expenses to rise as it spends on new call centers and other operational improvements.
Looking ahead, Home Depot now expects fiscal 2012 earnings of $2.95 per share, up from the $2.90 per share it previously forecast. Sales are still expected to rise 4.6 percent, implying revenue of $73.63 billion.
Analysts expect earnings of $2.92 per share on revenue of $73.95 billion.
Home Depot runs more than 2,200 stores. Its smaller rival Lowe's Cos. reports its earnings Monday.
Shares of Home Depot rose $1.60, or 3 percent, to $54.42 in morning trading.
Associated PressSource: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2012-08-14-Earns-Home%20Depot/id-4a95e878bbd34177bb9319d7b1c0c917
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