Home Depot got more done this quarter…a lot more.
The big home improvement chain blew away Wall Street this morning in announcing outstanding top and bottom-line results for its third quarter. More importantly, it sent a strong message to the entire national economy that the pandemic-driven boom in home improvement and furnishings business was far from over.
How much improvement was there in Depot’s numbers? Consider: Overall net sales jumped nearly 10% to $36.8 billion, beating analyst estimates of $35 billion. Net earnings were even more impressive, up 20.3 percent to $4.1 billion or $3.92 per share. Same store sales rose 6.1%, again blowing away Street estimates of 1.4%. Indeed, the only miss was on the retailer’s total transactions, which fell 5.5% indicating there were fewer home projects in process compared to a year ago when stay-at-home conditions were at their peak. But a nearly 13% increase in the average ticket helped to more than compensate for that fall-off.
While the entire home-related sector has been putting up outstanding numbers over the past 15 to 18 months, there have been concerns that as people started to venture out of their homes again, they might reduce spending on remodeling and furnishings and move those disposable dollars to out-of-home pursuits like vacations, travel and entertainment. Some home-specific retailers like Wayfair and Bed Bath & Beyond have recently posted disappointing results which they blamed at least partially on reduced spending on their merchandise.
Home Depot had no such problems and now all eyes will be on its chief competitor Lowe’s, which reports Wednesday. Over the past year its smaller rival has often outperformed Depot on several matrices but its business is thought to be more dependent on do-it-yourself customers rather than professionals.
Home Depot CEO Craig Menear, in announcing the results, said “elevated home improvement demand…has persisted” and interestingly there were no hedges about supply chain or inflation to dampen the good news. Wall Street agreed wholeheartedly, driving the stock up more than 4% when it opened Tuesday morning. Lowe’s was up a little more than 3% at the opening bell.
Americans may finally be emerging from their long hibernation but they are still putting spending on their homes at the top end of their shopping lists.