Atlanta-based The Home Depot, last week reported second quarter net earnings of $1.86 billion, or 90 cents per diluted share, up 9.8 percent compared to the same period in fiscal 2005. The company reported, on an adjusted basis, 93 cents per diluted share, up 13.4 percent, compared to 82 cents per diluted share for the same period in fiscal 2005.

Sales for the second quarter of fiscal 2006 totaled $26 billion, a 16.7-percent increase from the second quarter of fiscal 2005. Total sales in the retail segment grew 5.1 percent to $22.6 billion, reflecting new stores and comparable store sales of -0.2 percent. Total sales in the supply segment grew by 325 percent to $3.5 billion, driven by recent acquisitions, including Hughes Supply, as well as double-digit organic growth.

"In the second quarter, our disciplined approach to capital allocation resulted in a return on invested capital of 23.7 percent, up 70 basis points from the second quarter of fiscal 2005," said Carol Tome, executive vice president and chief financial officer. "We have one of the strongest balance sheets in retail and will use that strength to accelerate reinvestment in our retail stores in the back half of the year."

In the second quarter, the company repurchased 58 million shares, including the shares repurchased under an accelerated share repurchase program. Since its share repurchase program began in 2002, the company has repurchased 349 million, or approximately 17 percent, of its outstanding shares and spent $12.5 billion under its $14 billion authorization.

During the quarter, the company opened 30 new stores, including two relocations, with two new stores in Canada and one new store in Mexico, bringing the total store count to 2,079. All of the new stores include rental departments. As of the end of the quarter, approximately 10 percent of the company's store base was in Canada and Mexico, as compared to nine percent for the same period last year.

During the quarter, HD Supply experienced 325 percent sales growth and accounted for approximately 13 percent of the company's consolidated sales. The Home Depot made several acquisitions that will be integrated into the HD Supply family of businesses, providing professional customers with a continuum of products and services, from infrastructure through construction to lifetime maintenance.

In January, the company said it expected to grow its 2006 sales by 14 to 17 percent and its earnings per share by 10 to 14 percent. Based on the current economic environment and its reinvestment program, the company believes its fiscal 2006 sales and earnings per share growth will be at the low end of its guidance.

Home Depot Rentals is No. 5 on the RER 100.