Home Depot sales surge over 30% as pandemic-fueled demand remains robust

Same-store sales rose 31% in the first quarter ended May 2

A Home Depot delivery truck drives on Wall St. in New York City, U.S., August 16, 2017.

A Home Depot delivery truck drives on Wall St. in New York City, U.S., August 16, 2017.

Reuters/Brendan McDermid

Home Depot Inc on Tuesday reported a bigger-than-expected 31% jump in quarterly same-store sales, allaying concerns that the top U.S. home improvement chain would see pandemic-fueled demand easing as vaccinations gather steam.

The company's stock rose 2.2% in pre-market trading, set to add to the nearly 33% gain from the last 12 months when sales surged due to stuck-at-home Americans spending more to upgrade their living spaces.

Home Depot also benefited from builders and contractors rushing back to stores to get through a backlog of projects put on pause during the pandemic, as well as consumer confidence in the strength of the U.S. housing market.

The median existing house price surged a record 17.2% in March, while U.S. homebuilding jumped to nearly a 15-year high.

"Given the heady performance of last quarter it would have been tempting to say that Home Depot had reached its peak. However, as this morning's numbers show, Home Depot is still climbing," said Neil Saunders, managing director of GlobalData.

Saunders said a fresh round of government stimulus was "the icing on the cake" for the quarter, but warned this level of growth is unlikely to repeat in the second quarter as consumer spending turns to other activities such as travel.

Same-store sales growth was expected to slow in the first quarter to 19.9% from 24.5% in the prior three-month period, as more Americans get inoculated, virus restrictions ease and outdoor activities resume.

Sky-rocketing prices of lumber, which made up nearly 9% of Home Depot's total sales last year, are also expected to have boosted sales in the first quarter.

Overall net sales jumped 32.7% to $37.50 billion, beating estimates of $34.96 billion, according to IBES data from Refinitiv.

The company's net earnings of $3.86 per share, topping estimates of $3.08.

Shares of rival Lowe's Cos Inc , scheduled to report first-quarter results on Wednesday, were up 1.5%.

(Reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila) ((UdaySampath.Kumar@thomsonreuters.com; within U.S.+1 646 223 8780; Twitter: https://twitter.com/sampath_uday ;))

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