Home Depot Q2 sales increased to $23.8 billion, a 5.7% gain on fiscal Q2 2013. The world’s largest home improvement retailer posted net earnings of $2.1 billion ($1.52 per diluted share) from $1.8 billion ($1.24 per diluted share) in the same quarter last year.
Diluted earnings per share rose by 22.6%. Home Depot’s fiscal second quarter ended on August 3.
The do-it-yourself chain said higher-end items help boost figures, making it one of just very few retailers to improve its full-year profit estimates so far this quarter.
“In the second quarter, our spring seasonal business rebounded, and we saw strong performance in the core of the store and across all of our geographies. I would like to thank our associates for their hard work and dedication, especially at this time of increased demand.”
Fiscal 2014 Guidance
Home Depot forecasts a 4.8% increase in 2014 sales compared to 2013.
Based on its Q2 performance and its 2014 outlook, the company increased its diluted earnings per share (EPS) guidance by 20.2% to $4.52 for this fiscal year.
This EPS guidance includes the benefit of the $3.5 billion in share repurchases so far this year and the company’s intention to repurchase another $3.5 billion of shares during the second half of 2014.
(Data source: The Home Depot)
E-commerce and physical stores
Home Depot is investing heavily in e-commerce, something some investors find surprising, given that it sells bricks and mortar. However, the company is convinced its future is in the internet.
Unlike other retailers that have seen a drop in people entering their high street premises, Home Depot continues to attract more customers to its physical stores.
In Q2, there were 409.7 million customer transactions, a 4.2% increase compared to Q2 2013. Higher-priced items, such as windows, home installation services and laminate flooring posted strong sales.
Shoppers bought 8.4% more items costing at least $900; these products usually make up about one fifth of total sales.
A sign of an improving housing market?
Are Home Depot’s second quarter results a sign of an improving housing market or simply an example of a business that is operating well? Opinions among analysts appear to be split.
Forbes quotes Kate McShane, a Citi analyst who said “This strong performance gives us further confidence that Home Depot can handle a slower paced housing market recovery on strong execution. Based on these results, the bar has now been raised for Lowe’s second quarter release tomorrow.”
Home Depot shares increased by 3.8% in pre-market trading following the publication of its earnings results. So far this year, its stocks had only risen by 1.9%.