Home Depot Likes High Oil

Same-store sales by month were up 6.6% in May, 4% in June and 4% in July, said Home Depot CFO Carol Tome. The monthly results showed a similar deceleration in sales as the quarter progressed and were similar to Lowe's results released Monday.

"Like many retailers, the first part of June was the softest in the quarter," said Tome. "We think this performance was weather-related. Two weeks into the third quarter, our comps are running considerably ahead of second-quarter performance."

The company said the second quarter's results were the best in four years, with positive same-store sales reported in every geographic region across North America.

Gross margin in the quarter expanded 220 basis points to 33.7% of sales, Home Depot said, citing lower theft levels and a change in product mix. Operating expenses in the quarter increased about 140 basis points to 21.06% as a percent of sales. And operating margin expanded to 12.31% as a percent of sales, up roughly 80 basis points. It was the highest return on sales in the company's history, Home Depot said.

Over the past two years, Home Depot said it has focused on its merchandising to provide customers what they need to improve their homes. That has included new appliances, kitchen and bath products, lighting, fans and moldings. "Our customers are looking for gratification and they have higher aspirational desires," said Nardelli.

But the company was hesitant to hold both positive and negative external factors responsible for the latest quarter's results. "We believe our performance and our ability to execute is all up to us," said Tome.

In the second quarter, the company said the average purchase by a single customer was $54.73, up 8.2% from a year ago. The gain came across each of Home Depot's selling categories and also due to the increase in commodity price, especially in lumber and building materials.