Home Depot earnings, sales top estimates; raises guidance
The Home Depot reported better-than-expected third-quarter earnings and revenue amid hurricane-related prep and repairs, “normalized” weather and sales of seasonal goods.
Net income totaled $3.6 billion, or $3.67 a share, for the quarter ended Oct. 27, down from $3.8 billion, or $3.81 a share, in the year-ago period. Adjusted earnings came in at $3.78 a share, ahead of analysts’ estimates of $3.65 a share.
Sales rose 6.6% to $40.2 billion, topping the $39.310 billion analysts expected. Same-store sales fell 1.3%, less than expected. On average, customers spent $88.65 per transaction.
"While macroeconomic uncertainty remains, our third-quarter performance exceeded our expectations,” said Ted Decker, chair, president and CEO of The Home Depot. “As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects as well as incremental sales related to hurricane demand.”
Home Depot raised its full-year guidance. It now expects sales to increase about 4%, up from its prior guidance of 2.5% to 3.5%. The sales outlook include a lift from a 53rd week in the fiscal year and an approximately $6.4 billion contribution from SRS Distribution, which Home Depot acquired for $18 billion earlier this year. (SRS sells supplies to professionals in the roofing, landscaping and pool businesses.)
Same-store sales are expected to fall about 2.5%, down from prior guidance of 3% to 4%. Earnings per share are expected to fall about 2%, compared with prior guidance of a decline of 2% to 4%.
In an interview with CNBC, Home Depot CFO Richard McPhail said consumers are still deferring purchases as they wait for lower mortgage rates and borrowing costs and express caution about the economy.
“There is pent-up demand for projects,” he said.
At the end of the third quarter, Home Depot operated a total of 2,345 retail stores and over 780 branches across all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.
