By Matt Grossman 

Home Depot Inc. on Tuesday posted strong sales growth and a higher-than-expected profit in the latest fiscal quarter, emphasizing the company's success drawing home-improvement shoppers during the Covid-19 pandemic.

Revenue for the Atlanta-based retailer rose by 23% to $38.05 billion in the May-to-July period, up from $30.84 billion during the same three months of 2019. Analysts surveyed by FactSet had anticipated revenue of $34.53 billion.

The coronavirus pandemic and government stimulus checks have helped drive traffic to home-improvement retailers like Home Depot. As Americans spent more time at home during the public-health crisis, many turned their attention to domestic projects, shifting money they would have otherwise spent on vacations, gym memberships and other activities that have been postponed to prevent the virus's spread.

Home Depot's comparable-store sales in the U.S. -- which compare sales at stores opened more than a year -- grew by 25% year over year. The company notched double-digit percentage increases in the number of customer transactions, the average ticket size and sales a square foot of retail space.

Home Depot's earnings in the quarter were $4.33 billion, or $4.02 a share, up from $3.48 billion, or $3.17 a share, in 2019's second quarter. Analysts anticipated earnings of $3.64 a share.

Shares of Home Depot, up 32% in 2020, rose 1% in premarket trading to $291.30.

In the quarter, Home Depot spent $480 million on additional employee benefits during the coronavirus pandemic, including bonuses for hourly workers in stores and distribution centers. Since the pandemic began, the company has spent $1.3 billion on enhanced pay and benefits, Home Depot said.

While the coronavirus pandemic has battered parts of the U.S. retail landscape and forced long-struggling chains like J.C. Penney Co. into bankruptcy, it has given a boost to others. Restrictions meant to slow the virus's spread squeezed many small businesses and accelerated the yearslong shift to online shopping, allowing Amazon.com Inc. and Walmart Inc. to flourish. It also strengthened giants like Home Depot and Lowe's Cos., which largely remained open earning sales as customers came to stores.

Separately on Tuesday, Walmart's quarterly sales surged as the retail behemoth continued to use its scale, e-commerce supply chain and grocery business to attract shoppers buying food and household goods during the pandemic.

Overall, Walmart's global revenue rose 5.6% to $137.7 billion, and its comparable U.S. sales at stores or digital channels increased 9.3% in the quarter ended July 31.

Retailers like Walmart and Home Depot have benefited from federal stimulus checks to consumers and federally enhanced unemployment benefits. July marked the third straight month that U.S. households' retail spending increased, according to Commerce Department data. A more recent analysis by research firm GlobalData suggests consumer spending may have moderated after the enhanced $600 weekly unemployment benefit expired at the end of July.

Daily foot traffic to Home Depot stores since April has been running at least 35% above last year's, according to Unacast Inc., which tracks location data from 25 million cellphones on any given day. In 26 states, traffic doubled following a surge in late May.

Write to Matt Grossman at matt.grossman@wsj.com

 

(END) Dow Jones Newswires

August 18, 2020 08:36 ET (12:36 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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