The home improvement retailer's quarterly sales and profit rose sharply, but it says the strong dollar could hurt sales growth this year. Fred Katayama reports.
Americans are spending more money fixing up their homes, and that's jacking up sales at Home Depot. Same-store sales in the U.S. rose nearly 9 percent in the latest quarter. And profit rose sharply because it sold part of its stake in an industrial products distributor. Home Depot will give back some of that cash. It's boosting its dividend 26 percent. And it'll buy back $18 billion worth of shares by 2017. The world's largest home improvement chain is benefiting from the stronger job market and low interest rates that are encouraging people to buy homes and spruce up existing ones. Analysts say Home Depot benefited from its stores' proximity to metropoltian areas, where the housing market has bounced back rapidly. The report had a rough spot. The retailer warned that the strong dollar at current levels could rob the company of $1 billion in sales growth this year. Piper Jaffray senior analyst Peter Keith said, "It was a very strong quarter. They've got some headwinds from foreign exchange because of its Canadian stores. But Home Depot usually has a modest, conservative view for the year, and last couple of years, they were able to beat original expectations." Shares rose in early trading, extending their torrid rally. They've more than tripled over the last five years. Also rising at the open: shares of Toll Brothers, after the luxury homebuilder reported strong results.