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Home Depot beats estimates, retailer says it sees sales growth ahead for 2022

A shopper leaves a Home Depot with merchandise that she purchased on August 17, 2021 in Alexandria, Virginia.

Alex Wong | Getty Images

Home Depot on Tuesday said sales grew 11% in the fiscal fourth quarter, as the retailer topped Wall Street’s expectations and said it sees sales growth ahead for 2022.

The company said it expects earnings per share growth to be in the low single digits and sales growth to be “slightly positive” in the coming fiscal year.

Home Depot shares were down more than 1% in premarket trading, as the broader market declined amid Russia-Ukraine tensions.

Here’s what the home improvement retailer reported compared with what Wall Street was expecting for the quarter ended Jan. 31, based on a survey of analysts by Refinitiv:

  • Earnings per share: $3.21 vs. $3.18 expected
  • Revenue: $35.72 billion $34.87 billion expected

Net income for the fiscal fourth quarter grew to $3.35 billion, or $3.21 per share, from $2.86 billion, or $2.65 per share, a year earlier. Analysts surveyed by Refinitiv were expecting earnings per share of $3.18.

Net sales rose to $35.72 billion, topping expectations of $34.87 billion. 

Home Depot’s same-store sales climbed 8.1%, higher than the 5% gain that analysts expected, according to StreetAccount. Its same-store sales in the U.S. increased 7.6%.

Home Depot’s transactions fell in the quarter to 402.5 million, but the average ticket rose to $85.11. That’s compared with 416.8 million visits and an average ticket of $75.69 in the year-ago period. Sales per retail square foot also jumped to $571.79 from $528.01 in the year-ago period, signaling customers are taking on bigger projects or hiring contractors to tackle them.

The retailer has been a clear pandemic winner, thanks to Americans taking on do-it-yourself projects and redecorating their homes. Yet it has had other dynamics work in its favor, too. Millennials, the country’s largest generation, are moving into their first homes or into bigger homes, even as some baby boomers, the second-largest generation, decide to age in place. That’s squeezing supply and driving real estate prices higher. The country’s aging housing stock is causing more repair, maintenance and renovation projects, too — as is the additional wear-and-tear from Americans spending more time at home as they work remotely.

Some investors wonder if home improvement’s hot streak will cool as retailers lap a period of government stimulus, raise prices because of inflation and compete with other spending priorities like dining out and vacation. Mortgage rates are also expected to rise, which may price out potential homebuyers or delay projects once they buy.

Home Depot’s forecast, while positive, reflects more conservative expectations for growth in the quarters ahead. Its outlook is roughly in line with analysts, who expect sales to rise 2.5% and earnings per share to increase 4.7% for the full year, according to Refinitiv.

The company will have a new CEO soon. On March 1, a company veteran, Chief Operating Officer Ted Decker, will succeed Craig Menear, who will continue to serve as chair of the board.

Home Depot’s board approved a 15% increase in its quarterly dividend, bringing it to $1.90 per share.

As of Friday’s close, Home Depot shares are up 24% over the past 12 months and have outperformed the broader market. The S&P 500 has risen about 11% over the past year. The stock closed Friday at $346.87, down less than 1%. The company’s market value is $362.22 billion.

Read the company’s news release here.

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