Home Depot earnings top estimates as sales surge 25%


People wear protective face masks outside Home Depot in the Flatiron district as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on August 8, 2020 in New York City.

Noam Galai | Getty Images

Home Depot reported its fiscal fourth-quarter earnings before the bell Tuesday.

Here’s what the company reported compared with what Wall Street expected, based on Refinitiv’s consensus estimates:

  • Earnings per share: $2.65 vs. $2.62, expected
  • Revenue: $32.26 billion vs. $30.73 billion, expected

The retailer’s results will indicate whether pandemic trends and the real estate market continue to lift home improvement sales. The company is also preparing for spring, which is typically its busiest season.

During the pandemic, Americans have had a “nesting” mindset and their homes have served a wide range of purposes, from remote classroom and office to gym. Consumers have taken up do-it-yourself projects and hired professionals for home renovations. Some have moved out of densely populated cities and bought houses in suburban or rural areas, as they seek more space or take advantage of low interest rates.

At Home Depot, that has boosted business. Its U.S. same-store sales grew by about 25% in the second and third quarters, as consumers visited the retailer’s stores and website more and spent more money. Its digital sales rose 80% year over year in the third quarter, with customers picking up most of those online orders at stores.

Analysts expect Home Depot’s same-store sales will grow by 19.2% in the fourth quarter, a large gain but slower rate than the peak of the pandemic, according to a StreetAccount survey.

Home Depot has not provided an outlook for the year. It faces tough comparisons in the coming quarters because of the big numbers it put up during the pandemic. It may have to work harder for wallet share, too, as consumers get Covid-19 vaccines and spend weekends out to dinner or on vacation instead of painting or doing repair projects. Its sales could be buoyed, however, by a rebound of home professionals’ businesses, as consumers feel more comfortable inviting people into their houses and pay for projects they put off or couldn’t tackle on their own.

About 45% of Home Depot’s sales come from pros, such as plumbers, electricians and contractors, with the rest coming from do-it-yourself customers. That’s a higher percentage from rival Lowe’s, which gets 20% to 25% of its sales from pros. Home Depot also counts larger home professionals as clients.

Home Depot could build on that advantage with HD Supply. It acquired the former unit of the company and large industrial products distributor in November in a deal valued at $8 billion.

As of Monday’s close, Home Depot’s shares are up more than 12% from a year ago. The company’s market value is $296.98 billion.

This story is developing and will be updated.


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