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People walk through a Home Depot parking lot in Whitby, Ont., on May 28, 2020.Christopher Katsarov/The Globe and Mail

Home Depot Inc. reported its biggest rise in quarterly same-store sales in at least two decades on Tuesday as demand for paint, tools and lawn mowers surged from consumers stuck at home because of the COVID-19 pandemic.

The company’s same-store sales jumped 23.4 per cent in the second quarter, surging past analysts’ average estimate of a 10.5-per-cent rise, as the home improvement chain emerged as one of the corporate winners during the pandemic.

Shares of Home Depot, however, fell about 1 per cent in morning trading after analysts cautioned that its sales might have hit their peak.

“These are record comparable sales – it’s really tough to sustain that,” Wedbush Securities analyst Seth Basham said. “We will see a slowdown in the back half of the year – the question is the degree to which the slowdown occurs.”

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The company said it could not determine whether strong demand from earlier months would continue for the rest of the year, despite the U.S. housing market performing better than the broader economy.

People spending more time on do-it-yourself home projects such as painting and gardening pushed Home Depot’s overall sales up 23.4 per cent to a record US$38.05-billion in the quarter ended Aug. 2.

That resulted in the company’s highest ever profit sharing payout to its hourly employees.

The company spent about US$480-million in additional benefits, including weekly bonuses and overtime, to compensate workers required to work in stores and warehouses amid the health crisis.

Still, net income rose 24.5 per cent to US$4.33 billion, or US$4.02 a share. Analysts had expected a profit of IS$3.71 a share, according to IBES data from Refinitiv.

Shares of smaller rival Lowe’s Cos. Inc., which reports second-quarter results on Wednesday, were down marginally.

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This content appears as provided to The Globe by the originating wire service. It has not been edited by Globe staff.

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