The home improvement retailer also raised its outlook for both revenue and same-store sales for the full year, as the number of customer transactions jumped during the latest period and shoppers are spending more at Home Depot stores overall.
Home Depot shares were up more than 1 percent in premarket trading on the news.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Thomson Reuters:
- Earnings per share: $3.05 vs. $2.84 expected
- Revenue: $30.46 billion vs. $30.03 billion expected
- Same-store sales: up 8 percent globally vs. an increase of 6.6 percent expected
Spring had a chilly start in much of the U.S. this year, prompting many homeowners to push back their gardening, and remodeling projects as far as into the summer. Despite the headwinds, consumers are still investing in their properties to see prices appreciate.
“If you are a homeowner and your home is continuing to go up in value, you feel much more comfortable investing back in that home,” Oppenheimer analyst Brian Nagel told CNBC.
Sales on a per-square-foot basis climbed 8.6 percent at Home Depot during the latest quarter, the average Home Depot shopper’s ticket jumped 5 percent to $66.20, and customer transactions were up 3.1 percent overall.
Home Depot sales have accelerated more broadly thanks to a strong housing market in the U.S. and favorable economic tailwinds. Consumer spending on home improvement items hasn’t fluctuated as much as it as on apparel, for example. In previous quarters, Home Depot has been helped by homeowners in recovery mode making repairs after severe storms including Hurricanes Harvey, Irma and Maria in 2017.
The Atlanta-based retailer is meanwhile focused on growing its Pro business and believes that by bolstering its delivery platform it will be able to take a larger share of the professional homebuilder market. The company said earlier this year that it plans to spend $1.2 billion over the next five years to bulk up its supply chain, with the goal of getting online orders to shoppers more quickly.
Net income for the second quarter of fiscal 2018 ended July 29 climbed to $3.5 billion, or $3.05 per share, compared with $2.7 billion, or $2.25 per share, a year ago. The results topped Street expectations for earnings of $2.84 a share.
Revenue climbed 8.4 percent to $30.46 billion from a year ago, surpassing expectations for $30.03 billion.
Same-store sales were up 8 percent globally, topping expectations for an increase of 6.6 percent. In the U.S., same-store sales climbed 8.1 percent, again surpassing expectations for 6.4 percent growth.
“Not only did our seasonal business rebound from the first quarter, but our overall results exceeded our expectations,” Home Depot CEO Craig Menear said in a statement.
Looking to the full year, Home Depot now expects revenue to climb roughly 7 percent, compared with a prior forecast of 6.5 percent growth. Same-store sales should be up about 5.3 percent in fiscal 2018, Home Depot said, up from a previous target of 5 percent growth.
In keeping with a $15 billion share buyback plan announced in December, Home Depot said Tuesday it will buy back $6 billion worth of stock this year.
Home Depot shares have climbed roughly 25 percent from a year ago, bringing the retailer’s market cap to $223.9 billion. That’s compared with Lowe’s, which has a market cap of $79.2 billion, and its stock has risen about 26 percent since this time last year.
Home Depot plans to hold a conference call with investors at 9 a.m. ET Tuesday to discuss these results.