Home Depot raises annual profit forecast as demand holds up

2 minute read
Register now for FREE unlimited access to Reuters.com

May 17 (Reuters) - Home Depot Inc (HD.N) increased its full-year profit forecast on Tuesday as home improvement retailers benefit from higher prices and steady demand for tools and building materials.

The company's shares rose 4% to $307.99 in premarket trading as Home Depot also posted a surprise increase in quarterly same-store sales.

During the COVID-19 lockdowns people took up several do-it-yourself (DIY) home projects and hired professionals to upgrade their homes, lifting sales at Home Depot and smaller rival Lowe's Cos Inc (LOW.N) in 2020.

Register now for FREE unlimited access to Reuters.com

Sales from DIY customers have slowed with the easing of pandemic-related curbs, according to analysts.

However, demand from home-improvement professionals is holding up despite price increases of products due to higher lumber and copper costs.

About 40% to 45% of Home Depot's customers are professionals, compared with 20% to 25% for Lowe's, according to brokerage Jefferies.

Home Depot now expects comparable sales to increase about 3% in fiscal 2022, compared with its previous forecast of a slight positive growth. Analysts were expecting a 1.4% increase, according to IBES data from Refinitiv.

The U.S. housing market remains hot amid tight supply helping sales at Home Depot and Lowe's, even as rising mortgage rates might be a dampener in the coming months.

Home Depot expects earnings per share growth to be in the mid-single digits percentage range in fiscal 2022, compared with its previous forecast of low-single digits percentage growth.

Expect sales and profit trends at Home Depot to help allay widespread market concerns of easing consumer spending at least for a while, Oppenheimer analyst Brian Nagel said.

Same-store sales rose 2.2% in the first quarter ended May 1, compared with analysts' estimates of a 2.7% decline.

Home Depot earned $4.09 per share in the reported quarter, beating estimates of $3.68.

Register now for FREE unlimited access to Reuters.com
Reporting by Praveen Paramasivam in Bengaluru; Editing by Shounak Dasgupta

Our Standards: The Thomson Reuters Trust Principles.