Home Depot said Tuesday its quarterly sales soared 23% as consumers stuck in the house during the coronavirus pandemic built decks, painted their walls and tackled other repairs, handily beating investor expectations.
The retailer also topped Wall Street's forecasts for earnings per share and revenue. Customer transactions, average ticket size and sales per retail square foot all saw double-digit growth from the same time last year.
But executives were wary of extrapolating the quarter's results for the rest of the year, sending shares down less than 1% in afternoon trading.
Here's what the company reported for the fiscal second quarter compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
Home Depot's profit also surged 25% to $4.33 billion, or $4.02 per share, during the fiscal second quarter ended Aug. 2, up from $3.48 billion, or $3.17 per share, a year earlier. Analysts surveyed by Refinitiv were expecting earnings per share of $3.71.
Net sales rose 23.4% to $38.05 billion, topping expectations of $34.53 billion and setting a record high for quarterly revenue. CEO Craig Menear said digital sales doubled, with customers picking up about 60% of their orders in stores.
Its U.S. same-store sales soared 25% in the quarter as consumers visited the retailer more and spent more money. Average purchases rose 10.1% compared with the same time last year to $74.12.
Sales to do-it-yourself customers outpaced those to professionals.
"They're not spending on travel and entertainment and restaurants, they're spending it on maintaining and enhancing their home," Chief Financial Officer Richard McPhail said in an interview. "And we think that we've reintroduced home improvement to the consumer in our markets."
Executives said sales to plumbers, electricians, contractors and other professionals picked up "meaningfully" from the previous quarter. Smaller pro customers were buying more than the higher spending pro segment, but the company is seeing increased demand from all professionals as stalled construction projects resume and some areas become more comfortable having professionals in their home.
Across the store, big ticket items, like riding lawnmowers and patio furniture, sold well during the quarter. Higher lumber prices, which recently hit records highs, helped Home Depot sales. However, some indoor installation items, such as special order kitchens and counter tops, saw softer sales.
Continuing the trend set in the first quarter, the company canceled its annual Memorial Day sale to limit traffic in already crowded areas of the stores, like its gardening department. The company said it will have "modest, modified events" in the future, similar to its smaller scale Fourth of July promotion this year.
While the pandemic is boosting sales for Home Depot, it's also raising costs. The company spent $480 million during the quarter on additional compensation for its employees, including weekly bonuses for hourly workers, down from $640 million in the previous quarter. An additional $110 million went toward safety costs, such as masks for its employees.
The company did not provide a new forecast for the remainder of fiscal 2020. Home Depot suspended its forecast in May, citing the uncertainty related to the coronavirus pandemic and its impact on the economy.
Still, Menear said the company's research has shown that consumers are still looking to take on indoor and outdoor projects in the short term, a positive sign for its business. And its same-store sales in the first two weeks of August are trending similar to its second-quarter levels.
McPhail said that the stimulus checks sent out in April "potentially" affected sales, but it is difficult to parse out the impact. Congress has discussed a second round of checks in the next stimulus package, although the funding may not be approved until September, provided that lawmakers come to an agreement.
Unlike many cash-strapped companies, Home Depot will pay out a dividend to shareholders for the second quarter.