Home Depot sales up 5.6% in the third quarter

Home Depot sales up 5.6% in the third quarter

home depot inc

HD 1.63%

Revenue rose 5.6% in the third quarter as higher prices again offset a slowdown in transactions.

The home improvement chain said Tuesday that customers spent an average of 8.8% more per transaction during the quarter, while the number of transactions fell 4.3%.

This is the sixth straight quarter that fewer, higher-priced transactions have boosted Home Depot’s sales after demand for home renovations surged in the first year of the Covid-19 pandemic.

Chief Executive Ted Decker said on a conference call that transactions were stronger than the company initially expected amid rising inflation, noting that “price sensitivity wasn’t as strong as we thought.”

Revenue was $38.87 billion, beating analyst estimates of $37.95 billion, with comparable revenue, which excludes store closures and openings, up 4.3% year over year.

That trend continued in the third quarter, with Home Depot’s project business remaining strong in most divisions even as demand in certain products and categories slowed, Mr. Decker said. Transactions involving large tickets, or transactions greater than $1,000, increased 10.1% year over year.

While rising mortgage rates have slowed the previously white-hot housing market, Home Depot executives said demand for renovation projects has only increased as more consumers choose not to move and instead build on their already rising home values.

Consumer spending has held up relatively well so far despite inflation, but experts say we’re nearing a tipping point. The WSJ’s Sharon Terlep explains the role that ‘elasticity’ plays in a company’s decision to increase prices. Photo illustration: Adele Morgan

Home Depot’s customers have been more resilient than most to the drag on consumer spending from inflation, Mr. Decker said. “Our client usually has a good job, rising wages and strong balance sheets. They own their home and have seen increased home equity,” he said.

At the other end of the spectrum, Walmart inc

on Tuesday also reported an increase in sales in the most recent quarter, a sign that its reputation for low prices is attracting buyers in a high-inflation environment. The big-box chain, which tends to attract lower-income consumers, saw comparable sales rise 8.2% in the U.S. while customer visits rose 2.1%.

For the quarter ended October 30, Home Depot reported net income of $4.3 billion, or $4.24 per share, compared to $4.1 billion, or $3.92 per share, in the Previous year. Analysts polled by FactSet had expected $4.12 per share.

Shares closed at $311.93 on Tuesday, down 1.63%. The stock is down 25% year-to-date.

Home Depot’s main competitor, Lowe’s Cos., is expected to report its quarterly results on Wednesday.

Write to Dean Seal at dean.seal@wsj.com

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