Home Depot’s Sales Bounce Back After Slow Start to Year

home depots sales bounce back after slow start to year
Home Depot's Sales Bounce Back After Slow Start to Year

Home Depot on Tuesday reported second-quarter sales that beat Wall Street estimates despite signs of a slowdown in the housing market, boosted by a rebound in demand for seasonal products and shoppers making more purchases to remodel their homes.
The No. 1 U.S. home improvement chain also raised its earnings and revenue forecast for the year, sending its shares up 2.4 percent to $198.8 in pre-market trading. Shares of the retailer have risen 25 percent in the past 12 months.

Consumers have continued to invest money into the places they live even as higher mortgage rates and rising real estate prices have hurt home sales this summer. Sales of new U.S. single-family homes fell to an eight-month low in June and data for the prior month was revised sharply lower, the latest indications that the housing market was slowing down.

“The (company’s) sales strength is likely to garner the most attention as we sense there had been some fear recently that the overall macro picture had been slowing down,” Stifel analyst John Baugh said in a note.

The retailer’s sales rebounded from the first quarter when cooler-than-usual weather in some parts of the United States hurt demand for spring-season products. The first quarter sales miss was the first in seven quarters for Home Depot, which has in recent years largely bucked the trend of big-box stores losing shoppers to online retailers including Amazon.com Inc.

Home Depot raised its full-year earnings forecast to $9.42 per share from $9.31. It also now expects comparable sales growth of about 5.3 percent, from 5 percent, and sales growth of about 7 percent, from 6.7 percent earlier.

The retailer said customer transactions rose 3.1 percent in the second quarter ended July 29.

Sales at Home Depot stores open for more than a year climbed 8 percent, beating the average analyst estimate of a 6.65 percent rise, according to Thomson Reuters I/B/E/S.

Net earnings increased to $3.5 billion, or $3.05 per share, in the quarter, from $2.7 billion, or $2.25, a year earlier. Analysts expected $2.84 per share.

Net sales rose 8.4 percent to $30.5 billion, beating expectations of $30.03 billion.

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