Home Depot Sales Surge, Extending Growth During Pandemic -- Update
May 18 2021 - 12:29PM
Dow Jones News
By Matt Grossman
Home Depot Inc. extended a streak of robust sales growth in its
latest quarter as a rise in demand that began with the coronavirus
pandemic continued into 2021.
Brisk sales to both professional buyers and do-it-yourself
customers boosted growth, Home Depot executives said. Demand for
supplies has continued into May, they added, following a quarter
with a higher level of big-ticket transactions and continuing sales
of wood products as lumber prices soar.
As the pandemic eases and the U.S. economy reopens, a booming
housing market is supporting sales-growth trends, which were
initially fueled by consumers stocking up and doing home
projects.
"As home values grow, people feel good about investing in their
home overall," Home Depot Chief Executive Craig Menear said on a
conference call with analysts. "That alone is, I think, a very
positive outlook for home improvement as you move forward."
Sales for the Atlanta-based home-improvement retailer climbed to
$37.5 billion in the three months ended May 2, from $28.26 billion
in last year's fiscal first quarter. Profit rose to $4.15 billion,
or $3.86 a share, from $2.25 billion, or $2.08 a share, a year
earlier.
Wall Street analysts had forecast sales of $34.82 billion and
profit of $3.02 a share, according to a FactSet survey.
On a comparable-store basis, the company's sales rose 31%,
including a 30% climb in the U.S.
In the first two weeks of May, U.S. comparable sales growth was
greater than 30% compared with 2019 levels, a sign that
pandemic-era shopping trends have continued, Chief Financial
Officer Richard McPhail told analysts.
Some Wall Street analysts said Tuesday that the
stronger-than-expected results would likely lead to higher
consensus estimates for Home Depot's performance in coming
quarters.
Lumber -- often cited in recent months as a contributor to
inflation concerns -- has continued to fly off shelves amid rising
prices, Ted Decker, Home Depot's operating chief, said on the
call.
"As soon as that product hits our stores, it sells," Mr. Decker
said. He cited sawmill capacity as a supply-chain bottleneck that
was contributing to higher prices.
Big-ticket sales -- transactions above $1,000 -- also indicated
a strong willingness by shoppers to spend on home improvement,
rising by about 50% on a comparable basis year over year. The
average ticket rose to $82.37, from $74.70 in last year's first
quarter. Home Depot's tally of customer transactions rose to 447.2
million in the quarter, from 374.8 million a year earlier.
Even as much in-person retail evaporated last spring, Home Depot
worked to keep its stores open, arguing that it should be
considered an essential retailer. In the year since, the company
also has benefited from the strong housing market and government
policies such as enhanced unemployment benefits and stimulus checks
that have supported consumer spending.
As a Covid-19 vaccination campaign has eased the pandemic's
caseload this spring, consumer behavior is evolving once more. In
April, U.S. retail sales were flat for March, representing a
plateau following seasonally adjusted growth from the pandemic's
worst months. On Tuesday, Walmart Inc. said its sales continued to
rise during the spring quarter, but at a slower pace than they had
earlier in the pandemic.
Write to Matt Grossman at matt.grossman@wsj.com
(END) Dow Jones Newswires
May 18, 2021 12:14 ET (16:14 GMT)
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