Estimates for Residence Depot (HD) Q1 2021 earnings

Customers wearing protective masks wait to check out at a Home Depot store in Pleasanton, California, United States on Monday, February 22, 2021.

David Paul Morris | Bloomberg | Getty Images

Home Depot slammed Wall Street earnings estimates on Tuesday as consumers frolicked their homes more than a year after the coronavirus pandemic.

Home Depot shares rose more than 2% in premarket trading but closed 1%. The stock is up 19% this year for a market value of $ 341 billion.

The company reported for the three months ended May 2, relative to Wall Street expectations, based on an analyst survey by Refinitiv:

  • Earnings per share: $ 3.86 versus $ 3.08 expected
  • Revenue: $ 37.5 billion versus $ 34.96 billion expected

The retailer reported net income of $ 4.15 billion, or $ 3.86 per share, for the first quarter compared to $ 2.25 billion or $ 2.08 per share last year. Analysts polled by Refinitiv expected earnings per share of $ 3.08.

Net sales rose 32.7% to $ 37.5 billion, beating expectations of $ 34.96 billion. Global sales in the same store grew 31% for the quarter, and Color was the only category where sales in the same store grew less than 20%. Online sales increased 27%. More than half of the digital orders were processed through stores.

In the first two weeks of May, US sales in the same store increased by more than 30% compared to the same period last year. However, the company declined to provide a settlement a year ago.

This is the first quarter that the retailer will be compared to their store during the year-over-year lockdowns. A year ago, first quarter sales of the same business increased 6.4%. Home Depot was ranked as a key retailer in accelerating sales for the company’s home improvement supplies as consumers embarked on new projects at home.

A booming real estate market has also contributed to growth, although rising lumber prices and higher interest rates have dampened new home sales in recent months.

“The current shortage of new homes is clearly helping to improve home values, which is good for household spending,” said CEO Craig Menear on the conference call.

For the first quarter of this year, 447.2 million customer transactions were reported, an increase of 19.3% over the previous year. Consumers also spent more during their visits. The average ticket increased 10.3% to $ 82.37.

Part of this increase in consumer spending could come with higher prices. For example, the price of sheet-oriented strand wood has quadrupled over the past year, according to executives, but demand has kept pace. Menear said the bottleneck in the supply chain is in sawmills where cutting capacity has not kept pace with demand.

“We don’t see a lot of capacity online so we probably won’t see a lot of finished wood product on sale. Once this product is available in our stores it will sell,” he said.

Thanks to the federal government’s stimulus checks, consumers also had more cash in their pockets. However, executives said it was too difficult to quantify the checks, most of which were sent to consumers in March.

Home Depot has not published an outlook for the 2021 financial year. Last quarter, the uncertainty caused by the pandemic was cited.

“Fiscal 2021 has got off to a good start as we continue to build on the momentum of our strategic investments and effectively manage the unprecedented demand for home improvement projects,” Menear said in a statement.

The company also updated its mask guidelines after the Centers for Disease Control and Prevention changed their guidelines for fully vaccinated individuals. Home Depot customers and employees who are fully vaccinated will no longer need to wear masks in stores unless state or local laws require face coverings.

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