Hurricanes help Home Depot sales
Hurricanes, fires and DIY-friendly millennials helped the largest U.S. home improvement chain post impressive same-store sales in the third quarter.
For the third quarter ended Oct. 29, same store sales rose 7.9 percent company-wide. In the U.S., they climbed 7.7 percent. Home Depot earned $2.17 billion, or $1.84 per share, in the quarter. During the same period last year, the company earned $1.97 billion, or $1.60 per share. Revenue also rose to $25.03 billion, from $23.15 billion.
"Though this quarter was marked by an unprecedented number of natural disasters, including multiple hurricanes, wildfires in the West, and earthquakes in Mexico, the underlying health of our core business remains solid," said Craig Menear, chairman, CEO and president. "I am proud of our team and suppliers for their extraordinary efforts to support those in the path of the various natural disasters throughout the quarter. Our support of the impacted communities continues."
During the third quarter, Home Depot's average shopper spent $62.84, up from $59.78 a year ago. Transactions under $50, which make up 16 percent of Home Depot's total sales, were up 2 percent. Transactions over $900, which account for 22 percent of sales, climbed 12 percent.
"We've seen a sequential improvement in the small ticket quarter-over-quarter ... tickets below $50, which have a tendency to lean more towards the DIY," Edward Decker, Home Depot's executive vice president of merchandising, said on a call with analysts and investors. "The types of projects that [millennials are] going to engage in are very similar to any new homeowner, and in research we see that the millennial is showing an interest to be DIYer."
The company estimates that hurricane-related sales positively impacted comparable store sales growth by approximately $282 million in the fiscal third quarter.
Home Depot is also poised to benefit from storm-related repairs for months or years to come, as consumers delay renovation projects for a variety of reasons.
Home Depot lifted its fiscal 2017 sales growth guidance and now expects sales will be up approximately 6.3 percent and comp sales will be up approximately 6.5 percent. The company also raised its diluted earnings-per-share growth guidance for the year and now expects diluted earnings-per-share growth of approximately 14.0 percent from fiscal 2016 to $7.36. The company's diluted earnings-per-share growth guidance includes the impact of $8 billion of share repurchases for fiscal 2017.
At the end of the third quarter, the company operated a total of 2,283 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.