Home Depot Tops Views, Boosts Guidance -- Update
May 17 2016 - 8:37AM
Dow Jones News
By Paul Ziobro and Anne Steele
American shoppers appear more willing to spend on homes than
clothes.
Home Depot Inc. on Tuesday reported a strong start to the year
with more shoppers visiting stores and spending at levels not seen
since before the housing bust.
Sales at existing stores rose 6.5% in the period. Shoppers spent
just over $60 per trip too, the highest level since the first
quarter of 2006. The retailer boosted its financial forecasts for
the year as a result.
Shares, already up 12% over the past three months, rose in
premarket trading to $137, just off an all-time high.
The home improvement chain's results stand in contrast to
retailers like Macy's Inc., Kohl's Corp. and J.C. Penney Co. which
reported sluggish sales last week, pummeling their shares. Those
department stores reported steep drops in their apparel sales in
part due to Amazon.com Inc., which has risen to the second-largest
clothes retailers in the U.S., according to analysts at Morgan
Stanley.
Home Depot, and fellow home improvement chain Lowe's Cos., also
face competition from Amazon on items such as power tools and
lighting fixtures. But the retailers say they their selection of
materials for home projects like mulch for the yard, or cabinets
for a kitchen remodel help protect them from the online behemoth's
reach.
Both chains have favorable housing trends at their backs. Home
prices are rising, giving owners more confidence to spend on larger
projects. More people are moving and starting new homes, and
America's old housing stock means plenty of opportunities for other
improvement projects.
"We were pleased with our stronger than expected start to the
year, driven by solid execution and broad-based growth across the
store," said Chief Executive Craig Menear.
For the first quarter, Home Depot reported a profit of $1.8
billion, or $1.44 a share, up from $1.58 billion, or $1.21, a year
earlier. Revenue climbed 9% to $22.76 billion.
Analysts polled by Thomson Reuters had forecast adjusted
earnings of $1.36 a share on $22.39 billion in sales, according to
Thomson Reuters.
For 2016, the company now expects adjusted earnings of $6.27 a
share on revenue growth of 6.3%, up from its previous guidance for
earnings of $6.12 to $6.18 a share on revenue growth of 5.1% to 6%.
Same-store sales are anticipated to rise about 4.9%.
Lowe's is slated to report results Wednesday.
Write to Paul Ziobro at Paul.Ziobro@wsj.com and Anne Steele at
Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 17, 2016 08:22 ET (12:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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