Home Depot's profit tops estimates as customer spending rises
Home Depot Inc (HD.N), the No. 1 U.S. home improvement chain, reported higher-than-expected quarterly profit and same-store sales on Tuesday, as customers spent more in its stores.
Sales at stores open for more than a year rose 5.5 percent, above the 3.9 percent growth expected by analysts polled by research firm Consensus Metrix. Comparable sales at U.S. stores increased 6 percent, Home Depot said.
The number of customer transactions was up 1.6 percent in the quarter, while the average ticket value rose by about $2 to $62.39.
Home Depot and smaller rival Lowe's Cos Inc (LOW.N) have remained a bright spot in the retail sector as a firming economy and higher wages are driving new home sales and an increase in the value of existing houses has spurred remodeling activity.
Retail sales rose 0.4 percent in April after an upwardly revised 0.1 percent gain in March, driven by hefty gains in sales of building material, according to the U.S. Department of Commerce.
"There are no near-term signs that the housing market will weaken. As such, we believe this will continue to provide a benefit across the remainder of this fiscal year," Neil Saunders, managing director of GlobalData Retail, wrote in a client note.
Home Depot's results are in contrast to falling sales at department stores such as Macy's Inc (M.N) and J.C. Penney Co Inc (JCP.N), which are battling with lower customer spending on apparel and growing competition from online and off-price retailers.
Home Depot's net income rose to $2.01 billion, or $1.67 per share, in the first quarter ended April 30, from $1.80 billion, or $1.44 per share, a year earlier.
Net sales increased 5 percent to $23.89 billion.
Analysts on average had expected earnings of $1.62 per share on revenue of $23.76 billion, according to Thomson Reuters I/B/E/S.
Home Depot's shares were up 2 percent at $160.59 in premarket trading on Tuesday.
The company also raised its earnings forecast for the year ending January 2018 to $7.15 per share from $7.13, citing anticipated share repurchases.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Martina D'Couto)