Home Depot profit beats as hurricanes spur demand

(Reuters) - Home Depot Inc (HD.N), the largest U.S. home improvement chain, on Tuesday raised its full-year profit and sales forecast again after hurricanes Harvey and Irma spurred demand for generators, flashlights and rebuilding materials.

The logo of Down Jones Industrial Average stock market index listed company Home Depot is seen in Encinitas, California April 4, 2016. REUTERS/Mike Blake/File Photo

The Dow component is riding a multi-year recovery in the housing market but as hurricanes ravaged the southern United States, customers flocked to its stores for emergency supplies.

Home Depot’s shares, already up 23 percent this year, were largely unchanged at $165.30 in premarket trading.

“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,” said Moody’s Vice President Bill Fahy.

The U.S. housing market recovery has been supported by steadily rising wages and low unemployment rates but supply constraints have been pushing up prices, encouraging homeowners to remodel homes and boosting sales at home improvement retailers.

Sales at Home Depot’s stores open for more than a year rose 7.9 percent in the third quarter, above the average analyst estimate of 5.9 percent, according to Thomson Reuters I/B/E/S.

Comparable sales at U.S. stores increased 7.7 percent, beating the average analyst estimate of 6 percent.

A Home Depot delivery truck drives on Wall St. in New York City, U.S., August 16, 2017. REUTERS/Brendan McDermid

The company said hurricane-related sales added about $282 million to comparable sales in the quarter.

Home Depot said it now expects sales to grow 6.3 percent and comparable sales to increase of 6.5 percent for the year ending January 2018.

The company had previously forecast sales growth of 5.3 percent and comparable sales to rise 5.5 percent.

Home Depot also raised its profit forecast for the third time this year, raising it to $7.36 per share from its previous expectation of $7.29.

Net income rose to $2.17 billion, or $1.84 per share, in the third quarter ended Oct. 29, from $1.97 billion, or $1.60 per share, a year earlier.

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.

Net sales rose 8 percent to $25.03 billion, helped by a 5 percent jump in average ticket and as transactions rose 2.5 percent.

Analysts on average had expected revenue of $24.55 billion.

Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sriraj Kalluvila

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