While the recent hurricanes battered many retailers, Home Depot told a different story on Tuesday, reporting strong same-store sales growth and earnings that beat estimates.
Hurricanes Harvey and Irma sent consumers to Home Depot stores in the southern states for generators, flashlights and rebuilding supplies, with comparable sales for the third quarter up 7.9% overall and 7.7% in the U.S. Analysts had expected a 5.8% gain.
Total net sales rose 8% to $25.03 billion while adjusted earnings came in at $1.84 a share, beating estimates of $1.82 EPS on revenue of $24.55 billion.
“The devastation caused by hurricanes and wildfires has been anything but a disaster for Home Depot, with the rebuilding efforts pushing already strong sales growth even higher,” Neil Saunders, the managing director of GlobalData Retail, wrote in a client note.
Home improvement businesses such as Home Depot and Lowe’s have been riding the long-running recovery in the housing market and have largely avoided the shift to online shopping that has hurt other retailers.
As CNBC reports, “E-commerce platforms, including Amazon, haven’t yet succeeded in amassing the same product assortments — from lumber to outdoor grills — online.”
In an earnings call, Home Depot CFO Carol Tomé said she didn’t see a housing slowdown over the next three years, citing the stock of older homes and rising prices. For full-year 2017, the company now expects earnings will rise about 14% to $7.36 per share, reflecting in part projected hurricane recovery sales.
Home Depot estimated that hurricane-related sales positively impacted same-store sales growth by approximately $282 million in the third quarter. It incurred approximately $104 million of hurricane-related expense, contributing to a negative impact of about $51 million on operating profit.
“Home Depot’s recent comparable store sales performance and improved sales and earnings guidance is a good indicator that the home improvement sector continues to paint a better outlook as it sidesteps broader retail woes,” Moody’s Vice President Bill Fahy said.
“Home improvement has remained a retail bright spot even as a myriad of headaches continue to afflict the broader retail industry,” he added.