Customers wearing protective masks wait to check out at a Home Depot store in Pleasanton, California, United States on Monday, February 22, 2021.
David Paul Morris | Bloomberg | Getty Images
Home Depot on Tuesday beat analysts’ estimates for second-quarter earnings and revenue as fewer customers visited its stores but those who spent more per trip.
The company’s shares slumped around 4% in pre-trading hours as Home Depot did not provide an outlook for the full year.
Sales in the same store also lagged slightly behind Wall Street estimates as the company rounded a period last year when customers flocked to its stores to purchase paint, wood, gardening supplies, and other materials for home remodeling projects.
Here’s how the company performed for its second fiscal quarter compared to Wall Street’s expectations, according to an analyst survey by Refinitiv:
- Earnings per share: $ 4.53 versus $ 4.44 expected
- Revenue: $ 41.12 billion versus an expected $ 40.79 billion
Home Depot net income for the three-month period ended August 31 rose to $ 4.81 billion, or $ 4.53 per share, from $ 4.33 billion or $ 4.02 per share last year. According to a refinitive poll, analysts were looking for $ 4.44 per share.
Revenue increased 8.1% to $ 41.12 billion from $ 38.05 billion a year ago. That exceeded expectations of $ 40.79 billion.
Sales in the same store increased 4.5%. That was less than the more than 5% growth expected by analysts surveyed by StreetAccount.
The company reported a 5.8% decrease in customer transactions year over year, but the average ticket was 11.3% larger. Revenue per square meter of retail space increased 5.3% year over year to $ 663.05.
Inflation could be a factor driving sales. Analysts say wood prices peaked in the last quarter.
A strong housing market, with rising home prices and low mortgage rates, has helped home improvement chains Home Depot and Lowe’s. However, analysts are watching how long this trend has continued, with the delta variant providing the latest headwind for retailers. The unease about the rising number of Covid-19 cases could slow consumer spending.
The company faces tough comparisons with a year earlier, when its brick and mortar stores remained open during the pandemic and many Americans invested in remodeling projects. Home Depot’s revenue growth is expected to slow down in 2021.
The company has not yet published an outlook for the financial year.
Home Depot and Lowe’s are vying for business from home improvement like electricians, who typically place bulk orders, in the coming quarters. Home Depot recently expanded its pro business with the acquisition of HD Supply, a major distributor of home appliances, plumbing and electrical appliances.
Home Depot’s shares are up around 26% since the start of the year.
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