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The
world's biggest home improvement chain has benefited as
consumers cut back spending on items such as apparel and
accessories and instead spend more on big-ticket purchases such
as houses and home renovations.
The company's quarterly results stand in stark contrast to those
of retailers such as Macy's Inc <M.N> and Kohl's Corp <KSS.N>,
which reported a drop in sales in the quarter.
"After last week's dismal set of retail trading updates, Home
Depot provides some much needed relief and also an indication of
where consumers are spending their money," Håkon Helgesen, an
analyst at research firm Conlumino, said in a note.
Home Depot said its strong start to the year was helped by
"week-to-week demand spikes caused by weather variability" that
resulted in growth across its business.
The company sells appliances and lawn and garden products as
well as building materials.
U.S. housing starts rose a stronger-than-expected 6.6 percent in
April, data showed on Tuesday.
Housing starts hit their highest level in five months in
February, before falling more than expected in March.
SAME-STORE SALES JUMP
Home Depot's shares, which as of Monday's close had risen 19.4
percent this year, were down 1.1 percent before the bell.
"We believe that February was the strongest month (for Home
Depot), driven by a 'warm winter' and unseasonal weather last
year in many areas," J.P. Morgan analyst Christopher Horvers
wrote in a client note. "March was solid and then April slowed
with normal spring weather volatility affecting sales."
Sales at Home Depot's U.S. stores open for more than a year rose
7.4 percent in the quarter ended May 1, well above the 4.9
percent average forecast of analysts surveyed by research firm
Consensus Metrix.
The company's net income rose 14 percent to $1.80 billion, or
$1.44 per share, while net sales rose 9 percent to $22.76
billion.
Analysts on average had expected earnings of $1.36 per share and
revenue of $22.39 billion, according to Thomson Reuters I/B/E/S.
Home Depot said it now expected full-year earnings of about
$6.27 per share, with overall sales growing about 6.3 percent
and comparable sales increasing by about 4.9 percent.
The company had previously forecast earnings of $6.12-$6.18 per
share on overall sales growth of 5.1-6.0 percent and comparable
sales growth of 3.7-4.5 percent.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Ted
Kerr)
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