Home Depot (HD) earnings in Q1 2022
Home Depot (HD) earnings in Q1 2022

Home Depot (HD) earnings in Q1 2022

Home depot on Tuesday raised its outlook for the full year and reported strong quarterly earnings, driven by the company’s strongest sales to date in the first quarter, an early signal that the retailer has so far managed inflation.

Home Depots executives said they have not seen shoppers shop down in the face of higher prices, and do not expect them to start.

For the financial year, the retailer now expects a sales growth of around 3% and a growth in earnings per. stock at mid-digit. The company previously predicted “slightly positive” sales growth and growth in earnings per share. share in the low single-digit. Wall Street expected revenue growth of 1.8% and earnings per share growth. share of 3.6% for the financial year 2022.

Here’s what Home Depot reported for the quarter that ended May 1 compared to what Wall Street expected, based on a survey among Refinitiv analysts:

  • Profit per. shares: $ 4.09 vs. $ 3.68 expected
  • Income: $ 38.91 billion against $ 36.72 billion expected

The home improvement retailer reported first-quarter net income tax of $ 4.23 billion, or $ 4.09 per share, up from $ 4.15 billion, or $ 3.86 per share, a year earlier. Analysts surveyed by Refinitiv expected the company to earn $ 3.68 per share.

Net sales rose 3.8% to $ 38.91 billion, exceeding expectations of $ 36.72 billion. Same-store sales rose 2.2% in the quarter.

U.S. same-store sales rose 1.7% despite declining domestic same-store sales in March and April as the company faced tougher comparisons with last year’s stimulus-check sales growth and an earlier spring. A year ago, the company reported 29.9% growth in same-store sales in the United States.

“The strong performance in the quarter is even more impressive given the robust performance we compared last year,” CEO Ted Decker said at the company’s conference call with analysts.

Weather inflation

Decker said the company has not seen the sensitivity to inflation that was originally expected.

Customer transactions decreased by 8.2%, but were offset by higher sales due to inflationary prices. The company’s average ticket increased by 11.4% and customers were still willing to trade for premium products. Transactions of at least $ 1,000 increased 12.4% during the quarter.

Sales to professionals exceeded sales to do-it-yourself projects. Kitchen and bathroom installation and building materials were among the categories experiencing double-digit growth, probably thanks to this trend.

“While we do not know how inflation may affect consumer behavior going forward, we closely monitor elasticities and customer trends across our respective categories and geographic areas and remain encouraged by the underlying strength we see in the industry,” he said.

This marks Decker’s first quarter at the helm of the company. Decker, a longtime Home Depot veteran, previously served as operations manager and inherited the top job in a tough time for home improvement.

Many consumers spent the early days of the pandemic painting their walls, buying new garden furniture, and taking care of other do-it-yourself projects that do not need to be repeated for at least a few years. Sustained inflation can cause consumers to postpone renovation projects.

In addition, rising interest rates could result in a slowdown in the hot housing market. So far, however, Home Depots executives have said that consumers considering moving are now more tempted to stay in their current low-rate mortgages and remodel their homes instead.

“We believe the medium to long-term underpinning of the demand for housing improvement has never been stronger,” Decker said.

Read the full report here.

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