Home Depot Inc, the largest U.S. home improvement chain, on Tuesday raised its full-year profit and sales forecast after Hurricanes Harvey and Irma spurred demand for generators, flashlights and rebuilding materials.
The Dow component, which is riding a multi-year recovery in the housing market, got a huge boost in the quarter as the hurricanes drove customers to its stores in the southern United States for emergency supplies.
Home Depot`s shares, up 23 percent this year, were marginally lower at $165.30 in morning trading.
Despite the spike in sales in the latest quarter, investors remain concerned about when the U.S. housing recovery might lose momentum.
Home Depot`s chief financial officer addressed those concerns on a post-earnings conference call.
"As we think about housing broadly and fears of slowdown, we don`t see that for 2018, 2019 and 2020," said Carol Tomé, citing the stock of older homes and rising prices.
A shortage of skilled labor is weighing on the supply of homes and pushing up costs, with U.S. house prices increasing for the seventh straight year.
Home Depot`s net sales rose 8 percent to $25.03 billion in the third quarter, helped by a 5 percent jump in average receipt and a 2.5 percent rise in transactions.
Sales of big-ticket items, which are priced above $900 and accounted for over a fifth of total sales, rose 12 percent.
Demand for appliances, vinyl plank flooring and products such as lumber and hand tools, bought by the company`s contractor-customers, drove the jump in big-ticket sales.
The company posted double-digit rise in comparable sales of hurricane-related merchandise, including generators, wet-dry vacuum cleaners and tarps.
Hurricane-related sales added about $282 million to comparable sales in the quarter, the company said.
Home Depot had recorded $377 million in sales of storm-recovery merchandise in 2012 after Hurricanes Irene and Sandy.
Comparable sales at U.S. stores increased 7.7 percent in the third quarter, beating estimates of 6 percent, according to Thomson Reuters I/B/E/S.
Home Depot said it now expects sales to grow 6.3 percent, comparable sales to increase 6.5 percent and a profit of $7.36 per share for the year ending January 2018.
Net income rose 10 percent to $2.17 billion, or $1.84 per share, in the three months ended Oct. 29.
The company earned $1.87 per share, excluding hurricanes-related items, according to Thomson Reuters I/B/E/S.
Analysts on average had expected earnings of $1.82 per share and revenue of $24.55 billion.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.