Home improvement fuels (false) optimism
The Home Depot's profits jumped 44% this quarter, beating expectations and signaling the recession is over. If only.
The Home Depot's bottom line boost is thanks to lots of cost cutting, namely slowed expansion and the closing of under performing stores, including all Expo Design Stores. Lowe's, is also closely watching what it spends and cutting wherever possible. Even so, the chain lost money for its first quarter, but exceeded Wall Street expectations.
As for all the optimism, it's more for the recovery of the home improvement sector than the overall economy. Lowe's Chairman and CEO Robert Niblock painted a pretty rosy picture, with consumers embarking on home improvement projects in greater numbers, mostly because they can't afford to pay someone else.
Retailers, like so many of us, are closing their wallets and reducing expenditures. The Home Depot and the others will continue to closely hold the line on spending, all the while waiting for the public to start doing the opposite.