Home Depot (HD) – Get Report posted stronger-than-expected first quarter earnings Tuesday amid what the world’s biggest home retailer called “unprecedented” demand for domestic projects.
Shares in the group slipped lower, however, following a weaker-than-expected reading of April housing starts and concerns that near record-high lumber prices could erode the group’s profit margins in the current quarter.
Home Depot said earnings for the three months ending on May 2, the company’s fiscal first quarter, were pegged at $3.86 per share, up 85.6% from the same period last year and well ahead of the Street consensus forecast of $3.06 per share. Group revenues, Home Depot said, rose 32.9% to $37.5 billion, again topping analysts’ estimates of a $34.61 billion tally.
Same store sales were up 31.1% from last year, Home Depot said, firmly ahead of the Refinitiv forecast of 19.9%, while comparable sales in the U.S. were up 29.9%, with both figures coming in well ahead of Street forecasts.
“Fiscal 2021 is off to a strong start as we continue to build on the momentum from our strategic investments and effectively manage the unprecedented demand for home improvement projects,” said CEO Craig Menear. “I am proud of the resilience and strength our associates have continued to demonstrate, and I would like to thank them and our supplier partners for their hard work and dedication to our customers.”
Home Depot shares were marked 0.4% lower in early trading following the earnings release to change hands at $318.68 each, a move that would trim the stock’s year-to-date gain to around 20%.
“As we have been highlighting in our KFL Data, sales were strong, with comps up 31.0%, above our expectations and the strongest result recorded in our model (going back to 1997),” said KeyBanc Capital Markets analyst Bradley Thomas.
The comp increase was balanced between traffic and ticket growth, with an increase in transactions of 19.3% and an increase in average ticket of 10.3%,” he added. “Management noted that FY21 is off to a strong start as Home Depot continues to build on the momentum from strategic investments and effectively manages the unprecedented demand for home improvement projects.