ATLANTA - Home Depot's fiscal second-quarter net income surged 14 per cent thanks to a rebound in its spring selling season.
The nation's largest home improvement retailer also raised its annual profit guidance Tuesday.
Spring is the biggest season for home-improvement retailers, as homeowners and others work on their yards and gardens. While the season started off a bit cold and rainy, weather improved and shoppers headed out to stores to pick up supplies. In particular, purchases over $900 like appliances and water heaters, which account for 20 per cent of total U.S. sales, rose 8 per cent.
"These results support the view of a continued recovery in the U.S. home-improvement market," Frank Blake, Home Depot's CEO, told investors during its earnings call.
Home Depot also has been helped of late by an improving U.S. housing market. Home prices have started to rise, and there's been steady job growth and fewer troubled loans dating back to the housing-bubble days. While the housing market has recently had a bit of trouble maintaining that momentum, many home owners are spending more to renovate their homes.
On Tuesday, the government offered encouraging data on the housing market. The Commerce Department reported that home construction rebounded in July, rising to the fastest pace in eight months and offering hope that housing has regained momentum after two months of declines. Home construction increased 15.7 per cent in July to a seasonally adjusted annual rate of 1.09 million homes.
Applications for building permits, considered a good sign of future activity, also showed strength in July, advancing 8.1 per cent to an annual rate of 1.05 million, after declines of 3.1 per cent in June and 5.1 per cent in May.
The July rebound reflected strength in single-family home construction, which rose 8.3 per cent, and in apartment construction, which was up 33 per cent.
Shares of Home Depot rose $3.88, or more than 4 per cent, to $87.47 in Tuesday trading.
For the three months ended Aug. 3, Home Depot Inc. earned $2.05 billion, or $1.52 per share. A year earlier it earned $1.8 billion, or $1.24 per share.
Analysts surveyed by Zacks Investment Research predicted earnings of $1.44 per share.
Revenue climbed nearly 6 per cent to $23.81 billion from $22.52 billion. This beat Wall Street's forecast of $23.57 billion.
Sales at stores open at least a year, a key gauge of a retailer's health, rose 5.8 per cent. In the U.S., the metric increased 6.4 per cent. Sales at stores open at least a year excludes results from stores recently opened or closed.
Online sales surged more than 38 per cent in the quarter.
Home Depot now foresees fiscal 2014 earnings of $4.52 per share. Its prior outlook was for $4.42 per share. Before that, the retailer anticipated earnings of $4.38 per share. Analysts polled by FactSet expect earnings of $4.41 per share.
The chain maintained its guidance for full-year sales to be up about 4.8 per cent from the previous year. Based on 2013's revenue of $78.81 billion, this implies approximately $82.6 billion. Wall Street predicts $82.5 billion.
Home Depot's smaller rival Lowe's Cos. reports its financial results on Wednesday.