House Depot (HD) Q1 2022 earnings

House Depot on Tuesday raised its full-year outlook and reported robust quarterly earnings, fueled by the corporate’s strongest first-quarter gross sales on report, an early sign that the retailer is up to now weathering inflation.

House Depot executives mentioned they have not seen customers buying and selling down within the face of upper costs, and do not count on them to begin.

For the fiscal 12 months, the retailer is now anticipating gross sales to extend about 3% and earnings per share development within the mid single digits. The corporate beforehand forecast “barely optimistic” gross sales development and an earnings per share improve within the low single digits. Wall Road was anticipating income development of 1.8% and earnings per share development of three.6% for fiscal 2022.

This is what House Depot reported for the quarter ended Might 1 in contrast with what Wall Road was anticipating, based mostly on a survey of analysts by Refinitiv:

  • Earnings per share: $4.09 vs. $3.68 anticipated
  • Income: $38.91 billion vs. $36.72 billion anticipated

The house enchancment retailer reported fiscal first-quarter internet earnings of $4.23 billion, or $4.09 per share, up from $4.15 billion, or $3.86 per share, a 12 months earlier. Analysts surveyed by Refinitiv had been anticipating the corporate to earn $3.68 per share.

Internet gross sales rose 3.8% to $38.91 billion, topping expectations of $36.72 billion. Similar-store gross sales elevated 2.2% within the quarter.

U.S. same-store gross sales rose 1.7%, regardless of home same-store gross sales declines in March and April as the corporate confronted harder comparisons in opposition to final 12 months’s stimulus verify gross sales enhance and an earlier spring. A 12 months in the past, the corporate reported U.S. same-store gross sales development of 29.9%.

“The robust efficiency within the quarter is much more spectacular given the strong efficiency we had been evaluating in opposition to final 12 months,” CEO Ted Decker mentioned on the corporate’s convention name with analysts.

Weathering inflation

Decker mentioned that the corporate hasn’t seen the sensitivity to inflation that was initially anticipated.

Buyer transactions fell 8.2% however had been offset by increased gross sales amid inflationary pricing. The corporate’s common ticket climbed 11.4%, and prospects had been nonetheless prepared to commerce up for premium merchandise. Transactions of at the least $1,000 elevated 12.4% within the quarter.

Gross sales to professionals outpaced these for do-it-yourself tasks. Kitchen and loo set up and constructing supplies had been among the many classes that noticed double-digit development, doubtless because of that development.

“Whereas we do not know the way inflation would possibly affect client habits going ahead, we’re carefully monitoring elasticities and buyer tendencies throughout our respective classes and geographies and stay inspired by the underlying energy we see within the enterprise,” he mentioned.

This marks Decker’s first quarter on the helm of the corporate. Decker, a longtime House Depot veteran, beforehand served as chief working officer and inherited the highest job at a tricky time for dwelling enchancment.

Many shoppers spent the early days of the coronavirus pandemic portray their partitions, shopping for new patio furnishings and taking good care of different do-it-yourself tasks that will not must be repeated for at the least just a few years. Persistent inflation could lead shoppers to place off renovation tasks.

Moreover, rising rates of interest may lead to a slowdown within the scorching housing market. To date, nevertheless, House Depot executives mentioned shoppers who’re contemplating a transfer at the moment are extra tempted to remain of their present low fixed-rate mortgages and transform their houses as an alternative.

“We consider that the medium-to-longer time period underpinnings of demand for dwelling enchancment have by no means been stronger,” Decker mentioned.

Learn the complete report right here.

Overall e-commerce sales have fallen the last two months in year-over-year data

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