Home Depot Inc reported higher-than-expected quarterly profit and sales on Tuesday and raised its full-year forecast as North American customers spent more on home repairs after a harsh winter. The world's No 1 home improvement chain said strong housing contrasted with below-consensus US GDP growth in the first quarter.
"The growth that we see in our business ... supports the view of the continued recovery in the US housing market," Chief Executive Craig Menear said on a conference call. Recent government data has led to optimism the housing market is picking up. US housing starts rose 20 percent in April to their highest level since November 2007. Reports on existing home sales and mortgage applications have also pointed to strength in the sector.
Home Depot said improved spending among wealthier Americans aided sales. About half of its shoppers live in homes valued above $200,000, which helped drive demand for big-ticket items like appliances. Stores across the United States catered to customers making home improvements after digging out from a long winter. Departments that outperformed included tools, decor, lighting, plumbing and appliances. Net income rose to $1.58 billion, or $1.21 per share, from $1.38 billion, or $1.00 per share, a year earlier. Excluding items, the company earned $1.16 per share, 1 cent ahead of Wall Street estimates, according to Thomson Reuters I/B/E/S.
Revenue rose 6 percent to $20.89 billion, also topping forecasts. Shares of the Dow industrials component were down 0.7 percent at $113.52. Up to Monday's close, the stock had risen nearly 9 percent this year, outperforming rival Lowe's Cos Inc, which reports results on Wednesday. Atlanta-based Home Depot raised its profit forecast for the year ending in February 2016 to between $5.24 and $5.27 per share including items, from $5.11 to $5.17. Wall Street was looking for $5.23 per share.
It also increased its full-year sales growth forecast to between 4.2 and 4.8 percent, from 3.5 to 4.7 percent. Total same-store sales rose 6.1 percent in the first quarter ended May 3. Analysts, on average, had expected a 5.5 percent rise, according to financial analytics firm Consensus Metrix. Home Depot has said it faces several dozen civil lawsuits after its data systems were breached between April and September last year. The first-quarter results included $7 million in breach-related costs, but Home Depot said it cannot yet estimate the full scope of costs related to the breach.
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