
Another Monster Quarter for Home Depot Proves Several Things
In the battle with ruthless Amazon (AMZN) - Get Report , it continues to pay off selling lumber and outdoor patio sets amid an ongoing U.S. housing rebound.
Home Depot (HD) - Get Report delivered yet another strong quarter on Tuesday, Aug. 15, helped by homeowners investing in their homes that are appreciating in value. The home improvement retailer delivered second quarter earnings of $2.25 a share vs. Wall Street estimates for $2.21 a share. Same-store sales rose 6.3%, blowing away forecasts for an increase of 4.4%.
U.S. comp came out higher, at more than 6.6%. The company also raised earnings per share guidance about 2% from $7.15 to $7.29, because of stronger comps, fueled by traffic and how much a customer spends per transaction, and some $7 billion in share buybacks, which were generally in line with Street expectations.
During the earnings call on Tuesday, CFO Carol Tome said the first-time home buyer has returned, which have driven sales, as the first homes tend to need more work and supplies and merchandise that Home Depot sales, from paint to lighting fixtures, to flooring to plumbing and appliances. "For us, it extends the recovery," said Tome. Other strengths were the DIY, and the company's Pro sector, which offers two- and four-hour delivery times in some locations.
Executives also talked about the integration of its digital and physical operations. Customers, they said, may typically shop Home Depot's site first and either finish the purchase online, or with big-ticket items, like appliances, visit a store to see the product and talk with a sales associate about it before deciding to buy.
Home Depot continued to defy conventional thinking in the U.S., where the likes of Amazon is hammering bricks-and-mortar retailers such as Macy's (M) - Get Report and J.C. Penney (JCP) - Get Report . U.S. same-store sales increased 6.6%, lifted by an increase in customer transactions and the average amount spent.
Shocker? Perhaps not: you can't order lumber and concrete with an Amazon Prime membership and have it delivered to a job site.
Despite the specter of further interest rate increases from the Federal Reserve possibly derailing housing's momentum later this year, Home Depot increased its full year profit outlook. Executives now see full year earnings of $7.29 a share, up from $7.15 a share previously.
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