Home Depot Raises Guidance as Profit Soars - Update
August 14 2018 - 5:16PM
Dow Jones News
By Kimberly Chin
Home Depot Inc. raised its earnings and sales targets for the
year as it continued to benefit from robust home-improvement
activity and a strong U.S. economy in the latest quarter.
The Atlanta company on Tuesday said it is targeting sales growth
of about 7% and comparable-store sales growth of about 5.3%, above
its prior guidance of 6.7% and 5%, respectively. Home Depot also
raised its earnings target to $9.42 a share from its earlier
forecast of $9.31 a share.
Home Depot said its second-quarter profit jumped 31% to $3.5
billion, or $3.05 a share, from the year-ago period. Analysts
polled by Thomson Reuters had expected a profit of $2.84 a
share.
Revenue rose 8.4% from a year earlier to $30.5 billion. Analysts
polled by Thomson Reuters were expecting revenue of $30.03 billion.
Meanwhile, overall comparable-store sales rose 8%, with U.S.
comparable-store sales rising 8.1%.
Shares of Home Depot fell 0.5% to $193.10 in Tuesday trading.
The retailer's shares have gained 1.9% this year.
The report comes as a basket of retail companies from Walmart
Inc. to Macy's Inc. are due to report earnings this week.
Home Depot benefited from customers spending more money on each
transaction in the latest quarter. The average customer ticket rose
5% to $66.20, driven in part by inflation for lumber building
materials and copper.
Ted Decker, Home Depot's executive vice president of
merchandising, said on a conference call that the company is
dealing with inflation on multiple fronts as costs for raw
materials and transportation rise. However, RBC Capital Markets
analysts said in a client note that Home Depot would be largely
unaffected by rising commodity prices as product manufacturers
would have to bargain hard to pass on price increases to the
retailer.
The company's profit continues to soar on a favorable economic
backdrop, marked by rising home prices, stronger housing formation
and tight housing supply. Low inventory levels are expected to
drive home prices higher and home-related investment activity.
"We feel very positive about the strength of the home
improvement sector and the customers' willingness to spend," Chief
Executive Craig Menear said on the call.
Analysts were also concerned that the retailer's plan to
accelerate investments to improve its supply chain and integrate
online tools to improve customers' in-store shopping experiences
would weigh on earnings over the next couple of quarters. The
company reported cost of sales rose 7.8% to $20.1 billion.
The investments, however, were seen as necessary to
"future-proof Home Depot's business against online competition,"
RBC analysts said in a note.
Home-improvement retailer Lowe's Cos. is due to release its
quarterly report Aug. 22.
Write to Kimberly Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
August 14, 2018 17:01 ET (21:01 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Home Depot (NYSE:HD)
Historical Stock Chart
From Mar 2024 to Apr 2024
Home Depot (NYSE:HD)
Historical Stock Chart
From Apr 2023 to Apr 2024