Home De­pot shares surge amid dis­as­ter re­cov­ery

Austin American-Statesman - - MONEY & MARKETS -

Sales at Home AT­LANTA — De­pot surged dur­ing the third quar­ter, a pe­riod marked by mas­sive re­build­ing ef­forts af­ter se­vere hur­ri­canes struck Florida and Texas, wild­fires con­sumed en­tire neigh­bor­hoods in the West and earth­quakes rat­tled Mex­ico.

The At­lanta-based home im­prove­ment re­tailer is one of the in­ad­ver­tent ben­e­fi­cia­ries af­ter catas­tro­phes, in­clud­ing hur­ri­canes Har­vey and Irma, shaved as much as at least one-half of 1 per­cent­age point off an­nual growth for the U.S. in the same quar­ter. Ma­jor depart­ment stores that re­ported third-quar­ter re­sults last week said that the storms had hurt their sales.

Home De­pot Inc., which is fur­nish­ing a lot of ma­te­rial for the re­cov­ery, raised its out­look for the year Tues­day.

“The dev­as­ta­tion caused by hur­ri­canes and wild­fires has been any­thing but a dis­as­ter for Home De­pot, with the re­build­ing ef­forts push­ing al­ready strong sales growth even higher,” writes Neil Saun­ders, the man­ag­ing di­rec­tor of Global-Data Re­tail.

Home De­pot has been one of the bright spots in re­tail­ing as it ben­e­fited from Amer­i­cans plow­ing money into their homes and it cre­ated a loyal fol­low­ing.

Home­build­ing has been slid­ing this year, but econ­o­mists re­main op­ti­mistic that the low level of un­em­ploy­ment will soon spark a re­bound in sales and con­struc­tion.

And Home De­pot’s re­cent per­for­mance “con­tin­ues to paint a bet­ter out­look as it side­steps broader re­tail woes,” writes Moody’s Vice Pres­i­dent Bill Fahy in a re­port. “Home im­prove­ment has re­mained a re­tail bright spot even as a myr­iad of headaches con­tinue to af­flict the broader re­tail in­dus­try.”

Home De­pot earned $2.17 bil­lion, or $1.84 per share, for the three months ended Oct. 29. That’s 3 cents bet­ter than ex­pected, ac­cord­ing to a sur­vey by Zacks In­vest­ment Re­search. Dur­ing the same pe­riod last year, the com­pany earned $1.97 bil­lion, or $1.60 per share.

Rev­enue also rose to $25.03 bil­lion, from $23.15 bil­lion, to beat an­a­lyst pro­jec­tions of $24.52 bil­lion. Sales at stores open at least a year, a key gauge of a re­tailer’s health, rose 7.9 per­cent. In the U.S., they climbed 7.7 per­cent.

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