Home Depot Inc raised its full-year profit forecast on Tuesday as home improvement retailers benefited from higher prices and steady demand for building tools and materials.
Home Depot also posted a surprise increase in quarterly same-store sales.
During the COVID-19 shutdowns, people took on several DIY projects and hired professionals to update their homes, boosting sales at Home Depot and its smaller rival Lowe’s Cos Inc in 2020.
Sales by DIY customers slowed as pandemic restrictions eased, analysts said.
However, demand from DIY professionals is holding up despite product price increases due to higher wood and copper prices.
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About 40 to 45 percent of Home Depot customers are professionals, compared to 20 to 25 percent for Lowe’s, according to brokerage Jefferies.
The Home Depot now expects comparable sales to grow about 3% in fiscal 2022, compared to its previous guidance of modest positive growth. Analysts had expected a 1.4% increase, according to IBES data from Refinitiv.
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The US housing market remains hot amid tight supply, supporting sales at Home Depot and Lowe’s, although rising mortgage rates could be a drag in the coming months.
The lumber industry is experiencing a drastic increase in prices and shortages
The Home Depot expects earnings per share growth to be in the mid-single-digit percentage range in mid-fiscal 2022, compared to its previous guidance for single-digit percentage growth.
Expect Home Depot’s sales and earnings trends to help ease widespread market concerns about curtailing consumer spending at least for a while, said Oppenheimer analyst Brian Nagel.
Same-store sales rose 2.2% in the first quarter ended May 1, while analysts estimated a decline of 2.7%.
Home Depot earned $4.09 per share in the quarter under review, beating estimates of $3.68.
(Reporting by Praveen Paramasivam in Bengaluru; Editing by Shounak Dasgupta)