Though Home Depot
Home Depot increased first-quarter net income by 41% to $$725 million, or $0.43 per share. Revenue increased 4.3% to $16.9 billion, and same-store sales increased 4.8%. (Comps improved by 3.3% here in the U.S., too.)
The ultra-big-box retailer also updated its guidance, saying it now expects fiscal 2010 sales to increase 3.5%, and earnings to increase 21% to $1.88 per share.
Lowe's tidings weren't quite so heartwarming. Its first quarter net income increased 2.7% to $489 million, or $0.34 per share. Revenue increased 4.7% to $12.4 billion, and comps jumped 2.4%.
While Lowe's management expects "solid demand" through the year, it said 2010 will be a "year of transition" for its industry. Our still-ailing economy makes me suspect that marble countertops, Berber carpets, and the other trappings of home-improvement mania could remain bubble-era bygones some time to come.
Investors should remain highly discriminating when buying retail stocks. Economic optimism has buoyed many such investments, but folks caught up in the euphoria seem to ignore the influence of high unemployment and a still-stagnant housing market. Consumers rallied for a recent spending comeback, but I'm not sure they can sustain their renewed largesse.
Unlike low-cost retail stocks Costco
Do home-improvement retail stocks make a good foundation for a healthy portfolio? Or should investors search for greener pastures in retail? Let us know in the comments boxes below.
Home Depot, Lowe's, Costco, and Wal-Mart are Motley Fool Inside Value recommendations. Costco is a Motley Fool Stock Advisor selection. The Fool owns shares of Costco. Try any of our Foolish newsletters free for 30 days.