Home Depot Inc. beat quarterly sales estimates by nearly $2 billion on Tuesday as Americans, buoyed by a strong housing market, hired more builders and handymen to complete large home improvement projects, boosting demand for tools and materials.
Professional contractors have been rushing back to Home Depot’s stores as they look to upgrade their toolkits and source building materials to complete a backlog of home improvement and repair jobs that were put on hold during the health crisis.
Rising home prices in the United States has also given people confidence to invest in upgrade jobs for their homes, while more millenials moving to suburban areas during the pandemic has expanded the core customer base of retailers like Home Depot.
Same-store sales rose 6.1 percent in the third quarter, beating estimates of a 1.4 percent increase, according to Refinitiv IBES data. Overall net sales rose nearly 10 percent to $36.82 billion, beating estimates of $35.01 billion.
“The results show that home spending is remaining strong even as we cycle the big COVID-related surge from a year ago,” D.A. Davidson analyst Michael Baker said.
Baker added that Home Depot’s profit margins were performing well despite surging freight and logistics costs due to global supply chain disruptions.
Home Depot has been spending heavily to minimize shortages including even chartering its own cargo ship to deal with the pandemic-driven slowdown of sea networks.
Still, the company said its net earnings rose 20.3 percent to $4.13 billion, or $3.92 per share, in the third quarter.
The retailer’s total transactions fell 5.5 percent as fewer do-it-yourself customers made purchases compared to last year when the pandemic sparked a surge in amateur home improvement projects.
Home Depot’s results set a high bar for smaller rival Lowe’s Cos Inc. when it reports quarterly results on Wednesday, analysts said, especially as Lowe’s is more dependent on DIY customers.
