Home Depot raises full-year profit and sales forecast due to hurricanes
Bengaluru — On Tuesday, Home Depot, the largest US home improvement chain, raised its full-year profit and sales forecast again after hurricanes Harvey and Irma spurred demand for generators, flashlights and rebuilding materials.
The Dow component is riding a multi-year recovery in the housing market, but as hurricanes ravaged the southern US, customers flocked to its stores for emergency supplies.
Home Depot’s shares, already up 23% this year, were largely unchanged at $165.30 in pre-market trading.
"Home Depot’s recent comparable store sales performance and improved sales and earnings guidance is a good indicator that the home improvement sector continues to paint a better outlook, as it sidesteps broader retail woes," said Moody’s vice-president Bill Fahy.
The US housing market recovery has been supported by steadily rising wages and low unemployment rates but supply constraints have been pushing up prices, encouraging homeowners to remodel homes and boosting sales at home improvement retailers.
Sales at Home Depot’s stores open for more than a year rose 7.9% in the third quarter, above the average analyst estimate of 5.9%, according to Thomson Reuters.
Comparable sales at US stores increased 7.7%, beating the average analyst estimate of 6%. The company said hurricane-related sales added about $282m to comparable sales in the quarter.
Home Depot said it now expects sales to grow 6.3% and comparable sales to increase of 6.5% for the year ending January 2018. The company had previously forecast sales growth of 5.3% and comparable sales to rise 5.5%. Home Depot also raised its profit forecast for the third time this year, raising it to $7.36 per share from its previous expectation of $7.29.
Net income rose to $2.17bn, or $1.84 per share, in the third quarter ended October 29, from $1.97bn, or $1.60 per share, a year earlier. The company earned $1.87 per share, excluding hurricanes-related items, according to Thomson Reuters.
Analysts, on average, had expected earnings of $1.82 per share. Net sales rose 8% to $25.03bn, helped by a 5% jump in average ticket and as transactions rose 2.5%. Analysts, on average, had expected revenue of $24.55bn.