Home Depot reported quarterly profit and revenue that beat Wall Street expectations. The strong results also marks the home-improvement retail giant’s highest quarterly sales in history.
Net income for the second quarter came in at $2.67 billion, or $2.25 per share, an increase from $2.44 billion, or $1.97 per share, in the same period last year.
Same-store sales were up 6.3 percent, topping forecasts of an increase of 4.4 percent. Comparable sales, which is an important metric, also increased 6.6 percent.
The Atlanta-based company reported revenue of $28.11 billion compared to $26.47 billion in the earlier period. FactSet-surveyed analysts expected earnings of $2.21 on revenue of $27.83 billion.
“These results were made possible by our hard working associates and the outstanding values brought forth by our supplier partners,” Craig Menear, Home Depot chief executive officer, said in an earnings statement.
Home Depot is expecting sales for the full-year 2017 to surge by 5.3 percent and comparative sales to rise 5.5 percent. Earnings per share for fiscal 2017 is also projected to grow 13 percent to $7.29. Per-share earnings growth guidance is driven by stronger comparative sales, increased customer spending and the impact of $7 billion of share repurchases for fiscal 2017, the company said.
According to Carol Tome, chief financial officer of Home Depot, sales were greatly driven by strong demand from first-time home buyers. These buyers are in need of more merchandise and supplies, such as paint, lighting fixtures, plumbing, flooring and even appliances. Other strong performers include the DIY and the Pro sector, which is offering about two- to four-hour delivery times in some areas.
Home Depot executives also noted the company’s integration of digital and physical stores as contributors to strong sales. According to them, many customers would initially shop at Home Depot stores and then finish their purchases online. For big-ticket purchases like appliances, customers would visit the store to check the item and approach a sales associate before deciding to purchase the product.
The company saw an increase in sales of big-ticket items, which are regularly priced at $900 and above. Sales for big-ticket products soared 12.4 percent during the second quarter, as more shoppers purchase appliances and Pro-heavy products. The average shopper’s ticket rose 3.6 percent, customer transactions surged 2.8 percent, and the company’s sales per square foot also increased 5.9 percent from last year.
According to Brian Nagel, analyst at Oppenheimer & Co., the increase may be partly attributed to the increase in sales of new homes in June. Nagel said that the results are “absolutely amazing” considering the current standing of the retail environment today. “What’s really incredible is that quarter after quarter they report these types of numbers… It all starts with sales,” Nagel told CNBC.
While the retail sector’s apparel segment is challenged to capture shoppers’ attention, home improvement retailers, however, are doing better.
The company’s shares rose 0.5 percent ahead of opening bell on Tuesday and soared 2.5 percent to $158.11. However, it backpedalled to negative territory at closing. Home Depot shares are down 2.65 percent to close at $150.17.
“We expect to see continued growth in the repair and remodel market as the U.S. has experienced solid wage growth, faster home price appreciation, and the reemergence of first-time homebuyers,” Tome said during a conference call with analysts and investors.
By the end of second quarter, Home Depot now has a total of 2,282 retail stores in all 50 states, including stores in Puerto Rico, the District of Columbia, U.S. Virgin Islands, Guam, Mexico, and 10 Canadian provinces.
As of Monday, shares of the company have increased 13 percent so far in the last 12 months.