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People shop for lumber at a Home Depot store in Alhambra, California on May 4, 2022.FREDERIC J. BROWN/AFP/Getty Images

Home Depot Inc. raised its annual profit and sales forecasts on Tuesday, easing concerns that demand for home-improvement tools and building materials would take a hit amid surging inflation.

The company’s shares rose as much as 5 per cent to US$310.78 as Home Depot’s first-quarter comparable sales increased, driven by higher sales of plumbing, building materials and paint, even as it flagged a late start to the spring selling season.

During the COVID-19 lockdowns people flush with stimulus money took up several do-it-yourself (DIY) home projects and hired professionals to upgrade their homes, lifting sales at Home Depot and smaller rival Lowe’s Cos Inc. in 2020.

Sales from DIY customers have slowed, but demand from home-improvement professionals has been steady despite an uptick in prices on higher lumber and copper costs.

“The home improvement consumer remains engaged … and project backlogs are very healthy,” chief executive officer Edward Decker said.

Home Depot now expects fiscal 2022 comparable sales to increase about 3 per cent, compared with its previous forecast of slight positive growth, and estimates per-share earnings to rise in the mid-single digits percentage range.

The forecast and results suggest underlying housing metrics are still favourable, Wells Fargo analyst Zachary Fadem said, despite the threat of rising mortgage rates.

Some Wall Street analysts found Home Depot’s forecast raise “unexpected,” given the volatile macro environment, which also saw Walmart cut its profit forecast for the year.

Home Depot’s same-store sales rose 2.2 per cent for the quarter ended May 1, compared with estimates of a near 3-per-cent decline, as customers spent more per trip. The company earned US$4.09 per share in the first quarter, beating estimates of US$3.68, according to IBES data from Refinitiv.

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