Home Depot Beats on Sales

Home Depot’s (NYSE:HD) fourth-quarter earnings surged past investors’ expectations, as consumers poured more money into home improvement due to the pandemic and strength of the real-estate market.

Shares were down more than 2% in pre-market trading, after the company did not provide an outlook for the year in its earnings report Tuesday. The shares began Tuesday trading down $10.09, or 3.7%, to $265.75.

Chief Financial Officer Richard McPhail said the retailer is not sure how long the pandemic will last and how that may influence consumer spending. He said if demand from the second half of last year continues, it would lead to slightly positive same-store sales growth and an operating margin of at least 14% this year.

Home Depot’s net income rose to $2.86 billion, or $2.65 per share, up from $2.48 billion, or $2.28 per share, a year earlier. Analysts surveyed expected earnings per share of $2.62.

Net sales rose 25% to $32.26 billion from $25.78 billion a year ago, and outpacing estimates of $30.73 billion.

U.S. same-store sales jumped by 25%. Overall same-store sales grew by 24.5%, higher than the 19.2% growth that analysts expected. The growth is in line with what Home Depot reported during the second and third quarter, when it benefited from keeping doors open as an essential retailer.

Home Depot faces tough comparisons in coming quarters because of the big numbers it put up during the pandemic. It may have to work harder for wallet share, too, as consumers get COVID-19 vaccines and spend weekends out to dinner or on vacation instead of painting or doing repair projects.