Tickers in this Article: HD, LOW, FDX, UPS
Home Depot (NYSE:HD), the largest home improvement chain in the U.S., showed signs of improvement with a profit of 20 cents a share in the fourth quarter of 2009. These results beat what analysts were expecting and showed a significant improvement over the 3 cent gain in the year ago comparable quarter. Fueled by the do-it-yourself segment, the company said the fourth quarter sales and profit performance was driven by gains in kitchen and bath, paint and flooring.

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8 Ways To Survive A Market Downturn

Size Has Its Advantages

Although the significantly weaker real estate environment continues to cause uncertainty for Home Depot, in times of turmoil, being the biggest certainly has its advantages. Even more so, Home Depot exists in a world with only one other meaningful foe, Lowe's (NYSE:LOW), the second largest home improvement retailer who also reported better than expected earnings.

When you operate in a duopoly-like environment like HD and Lowe's do, economic turmoil can have a significant advantage: additional market share on the cheap as smaller competitors go out of business. (For more, check out Competitive Advantage Counts.)

The advantages of size and market dominance have been very rewarding to other duopolistic businesses as well. Both FedEx (NYSE:FDX) and UPS (NYSE:UPS), the two largest package and document shipping companies, are reported to have picked up additional market share in 2009 as a result of the recession.

While Home Depot did not disclose any market share data in its earnings release, there's a good chance it too will benefit in this way from the recession. (For related reading, check out The Impact Of Recession On Businesses.)

Signs Of Improvement
In addition to profitability in 2009, Home Depot said 38 of its top 40 markets in the U.S. showed improvement. Same store sales were up 1.2%, the first positive same store figures since the first quarter of 2010. Indeed, CEO Frank Blake sees 2010 as a "transition year" for the company. HD is certainly confident in the future as it agreed to up the dividend payout by 5%. To be sure, the company is not expecting a big spike in big ticket items, but a gradual return along with continued strength in the DIY market looks promising.

One Nail At A Time
Home Depot has a long way to go before it sees the wonderful days of 2005 and 2006. Nevertheless, the company's resilience during this brutal downturn will likely create a more dominant company in the future. (For more, check out Dividend Facts You May Not Know.)

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