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Home Depot stocks were solid after the initial release of its positive third quarter (Q3) earnings report. The home improvement chain exceeded earnings estimates.
Home Depot delivers in Q3
Home Depot went beyond sales goals in Q3. Revenue was $26.30 billion, an increase of the $25.03 billion made a year ago. Earnings per share also jumped to $2.51, more than the $1.84 from 2017.
Despite a slowdown in the US housing market, there was still great interest in home improvement projects. The store also had better customer service with same-day delivery of its items. There was also a surge in people visiting Home Depot locations during the hurricanes that greatly affected the southern US in the fall. The retailer sold large amounts of plywood and generators during the storms. To help customers, the company donated goods as well.
Chief executive officer (CEO), Craig Menaer, shared the good news with shareholders.
‘We are pleased with our third quarter results and the growth that we saw from both our professional and do-it-yourself customers. Our customers continue to respond to our expansive assortment and enhancements we are making to drive an interconnected shopping experience. We saw continued strength across the store, as well as healthy growth in our digital business. We believe this is a testament to the overall strength of demand in the home improvement market,’ said Menear.
How Sears’ demise could help Home Depot
The recent closings of Sears stores could benefit Home Depot in the long run. Many shoppers told analyst Neil Saunders of GlobalData Retail that they would be willing to switch to the home improvement retailer for their shopping needs.
‘From our data, 62% of current Sears customers say they would consider Home Depot as an alternative for appliances which is far higher than the consideration for other home improvement retailers. This, along with improvements to ranges – including the introduction of Bosch branded products – will provide a nice upside to growth over the next couple of quarters,’ said Saunders.
Home Depot’s Q4 outlook
Home Depot has optimistic earnings expectations for Q4. Menear predicted that store sales would increase by 5.5%, slightly more than the projected 5.3%. He also noted that he expected earnings to rise by 34% in the next quarter.