An improving US housing market helped Home Depot Inc beat quarterly sales forecasts on Tuesday, and the world’s number one home-improvement retailer lifted its full-year earnings and revenue forecasts.
Shares of the Dow component rose 3.3 per cent to a record $123.60 in morning trading. The stock has far outperformed the broader market this year with a 17 per cent gain.
“The pace of growth was always bound to moderate as we came out of the exceptionally bad winter ... That the momentum has not slowed further is down to both a more confident consumer and greater activity in the housing market,” said Stephen Ward, director at retail research firm Conlumino.
Sales of appliances, tools, plumbing materials and lighting products were strong in the quarter, Home Depot said.
Despite moderate 2015 US GDP projections, housing data pointed to continued growth in the home-improvement industry, chief executive Craig Menear said on a conference call.
US housing starts rose to a near eight-year high in July as builders ramped up construction of single-family homes, suggesting the economy was firing on almost all cylinders. That followed Monday’s strong homebuilder sentiment data.
“Home Depot and the home-remodeling space remains one of the strong areas of US consumer spending,” said Peter Keith, senior research analyst at Piper Jaffray in New York.
Net income rose to $2.23 billion, or $1.73 per share, in the quarter ended August 2nd. Excluding items, the company earned $1.71 per share, in-line with the average analyst estimate.
Home Depot incurred $153 million in gross expenses in the quarter for a data breach last year when hackers stole about 56 million payment cards.
Net sales rose 4.3 per cent to $24.83 billion, beating analysts’ estimate of $24.69 billion, according to Thomson Reuters I/B/E/S.
Same-store sales rose 4.2 per cent, also ahead of estimates, according to research firm Consensus Metrix. US same-store sales rose at a faster clip.
Home Depot raised its profit forecast for the year ending in January to a range of $5.31 to $5.36 per share, from its earlier estimate of $5.24 to $5.27 per share. The forecast reflects this year’s estimated $7.0 billion in share buybacks.
The company said it now expected sales to grow 5.2 per cent to 6.0 per cent, above its earlier 4.2 per cent to 4.8 per cent range, partly due to last month’s $1.63 billion acquisition of supplier Interline Brands.
Smaller rival Lowe’s Cos Inc is scheduled to report results on Wednesday.
– (Reuters)
