Home Depot overcomes slow start to year, rising home prices

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FILE - Construction workers build new homes in Philadelphia, Tuesday, April 5, 2022. Low mortgage rates have helped juice the housing market over the past decade, easing the way for borrowers to finance ever-higher home prices. A run-up in rates in recent weeks is threatening to undo that dynamic, setting the stage for a slowdown in home sales this year as the increased borrowing costs reduce would-be buyers’ purchasing power. (AP Photo/Matt Rourke, File) — FILE – Construction workers build new homes in Philadelphia, Tuesday, April 5, 2022. Low mortgage rates have helped juice the housing market over the past decade, easing the way for borrowers to finance ever-higher home prices. A run-up in rates in recent weeks is threatening to undo that dynamic, setting the stage for a slowdown in home sales this year as the increased borrowing costs reduce would-be buyers’ purchasing power. (AP Photo/Matt Rourke, File)

Matt Rourke

AP

Home Depot’s first-quarter sales improved despite a slow spring start and the home improvement chain raised its full-year guidance.

Revenue increased about 4% to $38.91 billion, easily beating Wall Street expectations, according to a survey of analysts by Zacks Investment Research.

Sales at stores open at least a year, a key indicator of a retailer’s health, climbed 2.2% globally, and 1.7% in the U.S.

However, the quarterly sales exhibited the slowest pace of growth in two years, noted Neil Saunders, managing director of GlobalData, adding that it was still a pretty good quarter and that the company has managed to keep all the gains it made during the pandemic.

Saunders cautioned that Home Depot will need to keep an eye on some things, including customers transactions, which fell 3.9%. While customers are pulling bank on spending, particularly on big-ticket items, Saunders said that it’s not a major concern at the moment.

“We do not see an enormous collapse in demand as many households are still willing to invest in and improve their homes; but there is a definite softening on the cards which we have not seen for quite some time,” he said.

Home improvement stores have remained busy during the pandemic as people working from home took on new projects and now they’re in their traditional busy spring season as home owners head out for flowers, vegetables and other gardening and landscaping goods.

Home Depot earned $4.23 billion, or $4.09 per share, for the quarter, also topping analyst per-share projections of $3.67. A year earlier the Atlanta company earned $4.1 billion, or $3.86 per share.

Home Depot has continued to lure customers despite what may be a cooling of the housing market. Sales of previously occupied U.S. homes slowed in March to the slowest pace in nearly two years as a swift rise in mortgage rates and record-high prices discouraged would-be homebuyers.

Existing home sales fell 2.7% last month from February to a seasonally adjusted annual rate of 5.77 million, the National Association of Realtors said.

Last week mortgage buyer Freddie Mac reported that the 30-year rate ticked up to 5.3% from 5.27% a week earlier. By contrast, the average rate stood at 2.94% a year ago.

Home Depot now foresees earnings-per-share-percent-growth to be mid-single digits. It anticipates total sales growth and comparable sales growth of approximately 3%. The company previously predicted fiscal 2022 sales growth and same-store sales growth to be slightly positive. It had forecast low single digits earnings per share growth.

Shares rose 3.7% before the market open.

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