LOW Lowes Companies Inc

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)

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