Home Depot raises full-year profit forecast as demand holds steady By Reuters

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© Reuters. FILE PHOTO: The Home Depot logo is seen in Encinitas, California April 4, 2016. REUTERS/Mike Blake

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(Reuters) – Home Depot Inc raised its full-year profit forecast on Tuesday as home improvement retailers benefited from higher prices and steady demand for building tools and materials.

Shares of the company rose 4% to $307.99 in premarket trading as Home deposit (NYSE:) also saw a surprise increase in quarterly same-store sales.

During the COVID-19 shutdowns, people took on several do-it-yourself (DIY) projects and hired professionals to upgrade their homes, boosting sales at Home Depot and smaller rival Lowe’s (NYSE:) Cos Inc in 2020.

Sales by DIY customers slowed as pandemic-related restrictions eased, analysts said.

However, demand from home improvement professionals is holding up despite product price increases due to rising lumber and costs.

About 40% to 45% of Home Depot customers are professionals, compared to 20% to 25% for Lowe’s, according to brokerage Jefferies.

The Home Depot now expects comparable sales to grow about 3% in fiscal 2022, compared to its previous guidance of modest positive growth. Analysts had expected a 1.4% increase, according to IBES data from Refinitiv.

The US housing market remains hot amid tight supply, supporting sales at Home Depot and Lowe’s, although rising mortgage rates could be a drag in the coming months.

The Home Depot expects earnings per share growth to be in the mid-single-digit percentage range in mid-fiscal 2022, compared to its previous guidance for single-digit percentage growth.

Expect Home Depot’s sales and earnings trends to help ease widespread market concerns about curtailing consumer spending at least for a while, said Oppenheimer analyst Brian Nagel.

Same-store sales rose 2.2% in the first quarter ended May 1, while analysts estimated a decline of 2.7%.

Home Depot earned $4.09 per share in the quarter under review, beating estimates of $3.68.

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