Home Depot Inc increased its full-year profit forecast on Tuesday as home improvement retailers benefit from higher prices and steady demand for tools and building materials.
Home Depot also posted a surprise increase in quarterly same-store sales.
During the COVID-19 lockdowns people took up several do-it-yourself (DIY) home projects and hired professionals to upgrade their homes, lifting sales at Home Depot and smaller rival Lowe’s Cos Inc in 2020.
Sales from DIY customers have slowed with the easing of pandemic-related curbs, according to analysts.
However, demand from home-improvement professionals is holding up despite price increases of products due to higher lumber and copper costs.
About 40 per cent to 45 per cent of Home Depot’s customers are professionals, compared with 20 per cent to 25 per cent for Lowe’s, according to brokerage Jefferies.
Home Depot now expects comparable sales to increase about three per cent in fiscal 2022, compared with its previous forecast of a slight positive growth. Analysts were expecting a 1.4 per cent increase, according to IBES data from Refinitiv.
The U.S. housing market remains hot amid tight supply helping sales at Home Depot and Lowe’s, even as rising mortgage rates might be a dampener in the coming months.
Lumber industry seeing drastic price increase and shortages
Home Depot expects earnings per share growth to be in the mid-single digits percentage range in fiscal 2022, compared with its previous forecast of low-single digits percentage growth.
Expect sales and profit trends at Home Depot to help allay widespread market concerns of easing consumer spending at least for a while, Oppenheimer analyst Brian Nagel said.
Same-store sales rose 2.2 per cent in the first quarter ended May 1, compared with analysts’ estimates of a 2.7 per cent decline.
Home Depot earned $4.09 per share in the reported quarter, beating estimates of $3.68.
(Reporting by Praveen Paramasivam in Bengaluru; Editing by Shounak Dasgupta)