(Reuters) - Home Depot Inc, the largest U.S. home improvement chain, on Tuesday raised its full-year profit and sales forecast after Hurricanes Harvey and Irma spurred demand for generators, flashlights and rebuilding materials.
The Dow component, which is riding a multi-year recovery in the housing market, got a huge boost in the quarter as the hurricanes drove customers to its stores in the southern United States for emergency supplies.
Home Depot’s shares, up 23 percent this year, were marginally lower at $165.30 in morning trading.
Despite the spike in sales in the latest quarter, investors remain concerned about when the U.S. housing recovery might lose momentum.
Home Depot’s chief financial officer addressed those concerns on a post-earnings conference call.
“As we think about housing broadly and fears of slowdown, we don’t see that for 2018, 2019 and 2020,” said Carol Tomé, citing the stock of older homes and rising prices.
A shortage of skilled labor is weighing on the supply of homes and pushing up costs, with U.S. house prices increasing for the seventh straight year.
Home Depot’s net sales rose 8 percent to $25.03 billion in the third quarter, helped by a 5 percent jump in average receipt and a 2.5 percent rise in transactions.
Sales of big-ticket items, which are priced above $900 and accounted for over a fifth of total sales, rose 12 percent.
Demand for appliances, vinyl plank flooring and products such as lumber and hand tools, bought by the company’s contractor-customers, drove the jump in big-ticket sales.
The company posted double-digit rise in comparable sales of hurricane-related merchandise, including generators, wet-dry vacuum cleaners and tarps.
Hurricane-related sales added about $282 million to comparable sales in the quarter, the company said.
Home Depot had recorded $377 million in sales of storm-recovery merchandise in 2012 after Hurricanes Irene and Sandy.
Comparable sales at U.S. stores increased 7.7 percent in the third quarter, beating estimates of 6 percent, according to Thomson Reuters I/B/E/S.
Home Depot said it now expects sales to grow 6.3 percent, comparable sales to increase 6.5 percent and a profit of $7.36 per share for the year ending January 2018.
Net income rose 10 percent to $2.17 billion, or $1.84 per share, in the three months ended Oct. 29.
The company earned $1.87 per share, excluding hurricanes-related items, according to Thomson Reuters I/B/E/S.
Analysts on average had expected earnings of $1.82 per share and revenue of $24.55 billion.
Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sriraj Kalluvila