Coverage: Home Depot earnings show not all retailers struggling

Atlanta-based Home Depot Inc., the world’s largest home improvement retailer, reported earnings that were better than Wall Street expected, showing that not all retailers are struggling.

Lauren Thomas of CNBC.com had the news:

The retailer also raised its fiscal 2017 profit outlook. Shares of the stock traded were up 1.5 percent following the report.

Here’s what the company reported vs. what the Street was expecting:

• Earnings per share: $1.67 vs. forecast of $1.62, according to Thomson Reuters consensus estimates.
• Revenue: $23.89 billion vs. estimate of $23.74 billion, Thomson Reuters said.
• Same-store sales: 5.5 percent growth globally vs. forecast of 4 percent growth, according to FactSet estimates.

Home Depot said U.S. comparable sales — a metric monitored closely by the Street for retail stocks — climbed a whopping 6 percent during the first quarter, blowing past a 4.3 percent estimate compiled by analysts who cover the company.

Home Depot’s net income climbed to $2.01 billion, or $1.67 per share, in the first quarter, from $1.80 billion, or $1.44 per share, a year ago.

“We were pleased with our results as they reflected broad-based growth across our interconnected platform and all geographies,” Craig Menear, Home Depot CEO, wrote in a statement.

One point of strength for Home Depot was the gains it made in selling pricier items. The retailer said its average shopper’s ticket rose 3.9 percent from a year ago, while its sales per square foot of store space gained 4.6 percent during that period.

Charisse Jones of USA Today reported that the retailer is helped by home sales:

Home Depot’s growth in profits comes during a good stretch for the housing industry.

Homebuilder sentiment has been healthy, partly because contractors are buoyed by President Trump’s pledges of tax cuts and deregulation. Demand for new homes has held up as job and income growth remain steady, and house-hunting traffic and mortgage applications have been elevated, according to Nomura economist Lewis Alexander.

Construction, however, has been tempered by a limited supply of lots that can be developed, a labor shortage and rising costs. Costs could edge up further following the White House decision to impose duties on Canada for its lumber shipments to the U.S..

While builders are upbeat, housing starts have been choppy this year. Unusually warm winter weather pulled forward many starts to January and February, which led to a decline in March. Housing starts unexpectedly fell 2.6% in April, the Commerce Department said Tuesday, but that was led by apartment construction, which is volatile. Single-family starts rose modestly.

Sruthi Ramakrishnan of Reuters reported that the retailer was helped by big-ticket sales:

Sales of big-ticket items, which are priced above $900 and account for a fifth of total sales, rose 15.8 percent in the first quarter ended April 30, Home Depot said.

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.

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.

Inflation in commodity prices of lumber, building materials and copper also boosted average ticket prices by about 75 basis points, the company said.

Net income rose about 12 percent to $2.01 billion, or $1.67 per share, in the quarter.