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Home Depot: Worst of housing crisis is over

6/11/2009

Atlanta The Home Depot said Wednesday that economic indicators signal that the worst of the U.S. housing correction has passed. According to a report in Reuters, the retailer raised its 2009 profit forecast as it sees better margins this year through improved efficiencies.

Home Depot, which has been upgrading service and products in its stores to win back market share from rival Lowe's, said earnings could be flat this year, rather than falling as it previously forecast.

The company also said it plans to step up efforts to improve its distribution network by introducing more "rapid deployment centers" and more marketing campaigns targeting Hispanic communities.

Home Depot said its supply chain was not the best and had more room for improvement. "We are playing a bit of catch-up," a company executive said at an analyst meeting.

Home Depot said its strategic initiatives and a revival of the home-improvement market will allow it to achieve an operating margin of about 10% and a return on invested capital of about 15%.

Earlier this year, Home Depot announced plans to freeze officers' salaries and close certain specialty outlets to save money. It cut operating expenses 16.4% in the first quarter, which ended on May 3.

Home Depot said it still expects sales to fall by about 9% this year, with same-store sales down in a high-single-digit percentage range. It expects gross margins to be flat to slightly higher.

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