Home Depot Sales Surge, Extending Growth During Pandemic
Brisk sales to both professional buyers and do-it-yourself customers boosted growth, Home Depot executives said. Demand for supplies has continued into May, they added, following a quarter with a higher level of big-ticket transactions and continuing sales of wood products as lumber prices soar.
As the pandemic eases and the U.S. economy reopens, a booming housing market is supporting sales-growth trends, which were initially fueled by consumers stocking up and doing home projects.
“As home values grow, people feel good about investing in their home overall,” Home Depot Chief Executive Craig Menear said on a conference call with analysts. “That alone is, I think, a very positive outlook for home improvement as you move forward.”
Sales for the Atlanta-based home-improvement retailer climbed to $37.5 billion in the three months ended May 2, from $28.26 billion in last year’s fiscal first quarter. Profit rose to $4.15 billion, or $3.86 a share, from $2.25 billion, or $2.08 a share, a year earlier.
Wall Street analysts had forecast sales of $34.82 billion and profit of $3.02 a share, according to a FactSet survey.
On a comparable-store basis, the company’s sales rose 31%, including a 30% climb in the U.S.
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In the first two weeks of May, U.S. comparable sales growth was greater than 30% compared with 2019 levels, a sign that pandemic-era shopping trends have continued, Chief Financial Officer Richard McPhail told analysts.
Some Wall Street analysts said Tuesday that the stronger-than-expected results would likely lead to higher consensus estimates for Home Depot’s performance in coming quarters.
Lumber—often cited in recent months by investors and businesses as a contributor to inflation concerns—has continued to fly off shelves amid rising prices, Ted Decker, Home Depot’s operating chief, said on the call.
“As soon as that product hits our stores, it sells,” Mr. Decker said. He cited sawmill capacity as a supply-chain bottleneck that was contributing to higher prices.
Input prices also have been rising in other categories, Mr. McPhail said in an interview.
“We are seeing cost pressures in this environment just like everyone is. Supply chains are pressured, transportation is pressured,” Mr. McPhail said. He added that the company has been working with vendors and managing retail prices to keep products cost effective for customers.
Big-ticket sales—transactions above $1,000—also indicated a strong willingness by shoppers to spend on home improvement, rising by about 50% on a comparable basis year over year. The average ticket rose to $82.37, from $74.70 in last year’s first quarter. Home Depot’s tally of customer transactions rose to 447.2 million in the quarter, from 374.8 million a year earlier.
Even as much in-person retail evaporated last spring, Home Depot worked to keep its stores open, arguing that it should be considered an essential retailer. In the year since, the company also has benefited from the strong housing market and government policies such as enhanced unemployment benefits and stimulus checks that have supported consumer spending.
The housing sector “is much more supportive of home improvement than we would have predicted 12 months ago,” Mr. McPhail said in the interview.
As a Covid-19 vaccination campaign has eased the pandemic’s caseload this spring, consumer behavior is evolving once more. In April, U.S. retail sales were flat from March, representing a plateau following seasonally adjusted growth from the pandemic’s worst months. On Tuesday, Walmart Inc. said its sales continued to rise during the spring quarter, but at a slower pace than they had earlier in the pandemic.
Write to Matt Grossman at [email protected]
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Published at Tue, 18 May 2021 16:36:00 +0000
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