sales rose to the highest ever for the first quarter of the year.
The retailer exceeded earnings expectations in the quarter. Earnings per share were $4.09, up from $3.86 a year earlier. Analysts expected earnings of $3.69 a share.
“The solid performance in the quarter is even more impressive as we were comparing against last year’s historic growth and faced a slower start to spring this year,” said Ted Decker, chief executive officer.
Home Depot (ticker: HD) raised 2022 guidance for sales growth to 3% and an operating margin of about 15.4%. It expects EPS growth to be in the “mid-single digits,” it said.
First-quarter sales climbed to $38.9 billion from $37.5 billion a year earlier, a 3.8% increase. On a comparable-store basis, sales rose 2.2% worldwide and 1.7% at U.S. stores.
The stock was up more than 4% in premarket trading, although it’s pared some gains, rising 0.2% to $296.54 at recent check.
Home Depot’s unexpected increase to its forecast is an especially welcome development, given how concerned investors have been about ongoing demand for home improvement. Covid-19 had pulled forward a good deal of housing and housing-related projects—and cooler weather delayed the typical spring season.
The quarter wasn’t a perfect one: Like many other companies, Home Depot saw gross margin pressure and management cited inflation on its conference call. Nonetheless, the company is still seeing healthy demand, even in the face of rising prices and a wobbly housing market.
That likely raises investor expectations for rival Lowe’s (LOW), which is slated to report results Wednesday.
Home Depot, the biggest home-improvement company, is considered a bellwether for consumers. The pandemic, which has now passed its two-year mark, sent everyone into nesting mode.
Last year was huge for home-improvement companies, given a white-hot housing market, and ongoing waves of Covid-19 variants, both of which kept consumers spending on their living spaces.
Yet even the biggest bulls didn’t expect those levels to be sustainable as we return to a more normal environment.
Expectations had been mixed for the quarter. A chilly spring for much of the country coincided with a chilling effect from higher interest rates, which have pushed up the price of mortgages, meaning already high home prices are even more expensive for borrowers.
Still, as Barron’s noted, home improvement retail doesn’t necessarily have to trade in tandem with the housing market, given that the sector has other catalysts at its back.
Foot traffic has at least held up relatively well compared with prepandemic times. According to data compiled for Barron’s from Placer.ai, visits were positive for seven of the 12 weeks from roughly the start of February through April 18—the most recent available—compared with the same week in 2019. The last four of those weeks were down between 4.3% and 6.6%, but that may be down to the fact that 2019 was a more normalized environment, when the typical spring spike in demand held sway.
Write to Teresa Rivas at [email protected]