Shares of home improvement retailer Home Depot were moving higher almost 1% after announcing fiscal second quarter financial results.
Earnings and sales for the quarter easily beat what analysts had been expecting due to the benefits of a warmer start to the summer season.
This was a relief for the company as the spring season was rocky. For the second quarter, Home Depot reported earnings per share of $3.05. Analysts had been expecting earnings per share of $2.84. Revenue at $30.46 billion was also higher than the $30.03 billion that had been anticipated. Same store sales were up 8% globally compared to an expectation of 6.6%.
In the year ago quarter, net income was $2.7 billion, or $2.25 a share.
Sales on a per-square foot basis saw a growth of 8.6% during the second quarter. The average shopper’s ticket also saw a growth of 5% to $66.20 and customer transactions grew 3.1% overall.
Home Depot also raised its outlook for revenue as well as same-store sales for the full year, citing that the number of customer transactions had increased during the quarter and its customers were spending more.
“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,” remarked Oppenheimer analyst Brian Nagel to CNBC.
CEO Craig Menear said during a call with analysts and investors, “We’re very pleased with our performance in the second quarter, achieving a milestone of the highest quarterly sales and net earnings results in our company history. Sales for the second quarter were up $30.5 billion, up 8.4% from last year. Comp sales were up 8% from last year with U.S. comps of positive 8.1%. Diluted earnings per share were $3.05 in the second quarter.”
“Our results in the second quarter reflected what we call the bathtub effect. As expected, the majority of seasonal sales we missed in the first quarter were recovered in the second quarter. We also continued to see broad-based strength across the store and all geographies. In the U.S., all three of our divisions posted positive comps in the second quarter, as did our 19 regions and top 40 markets. Internationally, Canada and Mexico posted mid to high single digit positive comps in local currency during the quarter.”
“Our solid performance was driven by the outstanding execution of our store associates, merchants, suppliers and supply chain teams. Navigating a sudden spike in demand like the one we witnessed in May isn’t easy. For example, in the northern division the variability in sales over a two-week period of time was as high as 2,770 basis points as the weather turned more favorable.”
The company also revealed it opened its first MDO, or Market Delivery Operation during the second quarter. Menear stated, “Additionally, we told you that 2018 would be the year of the pilot as we test and learn with new fulfillment centers. I’m pleased to report that we are on track with our plan and opened our first MDO, or Market Delivery Operation, during the quarter. In the second half of this year, we plan to open additional facilities.”
Looking ahead, Home Depot expects revenue to see a growth of 7%. Previously the forecast was for 6.5%. Same-store sales are expected to jump around 5.3% compared to a previous forecast of 5%.
The company also announced that it would be buying back $6 billion worth of stock this year.