Home Depot Earnings Unexpectedly Rise; Dow Retail Giant Weathers Inflation With Lowe’s On Deck

Home Depot (HD) raised its full-year outlook Tuesday after posting a surprise profit for the first quarter, as the home improvement giant weathers cost inflation. Lowe’s (LOW) follows Wednesday. Home Depot stock erased gains while Lowe’s reversed lower.




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Spring is typically the strongest season for home improvement retailers.


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Home Depot Earnings

Home Depot earnings for the quarter ended May 1 rose 6% to $4.09 a share, beating FactSet consensus estimates for a 5% decline. Revenue climbed 3.8% to $38.91 billion, also ahead of views for a 2% fall. Same-store sales rose 2.2%, vs. expectations for a 3% drop, with US comps up 1.7%.

The home improvement giant continues to leverage brick-and-mortar sales while expanding e-commerce sales. More than half of Q1 online orders were fulfilled through a store, it said. In addition, professional sales growth outpaced DIY or consumer sales last quarter.

“The solid performance in the quarter is even more impressive as we were comparing against last year’s historic growth and faced a slower start to spring this year,” new Home Depot CEO Ted Decker said in an earnings release early Tuesday.

Management said on an earnings call that they haven’t seen shoppers pull back in the face of higher prices, and don’t expect them to start, according to CNBC.

“While we don’t know how inflation might impact consumer behavior going forward, we are closely monitoring … and remain encouraged by the underlying strength we see in the business,” Decker said.

For fiscal 2022, Home Depot guided EPS growth in the mid-single-digits with total sales and comps up about 3%. That improves prior guidance for low-single-digits EPS growth and “slightly positive” sales growth. Wall Street had seen Home Depot earnings rising 3.6% and revenue growing 1.8% in 2023.

Home Depot Stock

Shares of Home Depot eased 0.1% to 295.59 on the stock market today, after rising as high as 310.94. Home Depot stock puts resistance at a falling 50-day moving average and remains well below the 200-day average.

The relative strength line for Home Depot stock is improving after a slide since December 2021.

Lowe’s Earnings

Estimates: Wall Street forecasts that Lowe’s earnings per share will rise by a penny to $3.22 despite a 3% revenue decrease to $23.765 billion. Same-store sales are seen falling 2.5% after a 5% gain in the prior holiday quarter.

Results: Check back early Wednesday.

Outlook: Analysts project 2023 earnings per share of $13.39 and revenue of $98.106 billion, after Lowe’s guided higher in February.

Lowe’s Stock

Shares of Lowe’s turned 1.8% lower to 191.16 Tuesday, after rising earlier in the session. Lowe’s stock also remains well below key support levels. Floor & Decor (FND), which modestly beat earnings and sales views May 6, gained 2.3% Tuesday.

Inflationary Woes Follow Pandemic Boom

For Home Depot and Lowe’s, the pandemic boom in home renovations and spending has eased, while rising interest rates are weighing on the housing sector broadly.

The companies also face shortages of materials and drivers that are driving costs higher.

In 2020 and 2021, consumers stuck at home or moving home spent heavily on renovation projects.

Following a strong 2020 and 2021, this year started off strong for Home Depot and Lowe’s. Their January and February store visits continued above pre-pandemic levels, according to Placer.ai data.

But April visits fell 1.6% for Home Depot and 9.5% for Lowe’s vs. April 2019. Visits grew month over month in both March and April, the data firm says.

Find Aparna Narayanan on Twitter at @IBD_Aparna.

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