Strong Home Depot Results Show Pandemic’s Consumer Spending Shift

A shopper at a Home Depot store in Jersey City, N.J., on Friday.

Photo: Jeenah Moon/Bloomberg News

Home Depot Inc. HD 2.74% on Tuesday posted strong sales growth and a higher-than-expected profit in the latest fiscal quarter, emphasizing the company’s success drawing home-improvement shoppers during the Covid-19 pandemic.

Revenue for the Atlanta-based retailer rose by 23.4% to $38.05 billion in the May-to-July period, up from $30.84 billion during the same three months of 2019. Analysts surveyed by FactSet had anticipated revenue of $34.53 billion.

Home Depot’s comparable-store sales in the U.S.—which compare sales at stores opened more than a year—grew by 25% year over year. The company notched double-digit percentage increases in the number of customer transactions, the average ticket size and sales per square foot of retail space.

In the quarter, Home Depot spent $480 million on additional employee benefits during the coronavirus pandemic, including bonuses for hourly workers in stores and distribution centers. Since the pandemic began, the company has spent $1.3 billion on enhanced pay and benefits, Home Depot said.

Home Depot’s earnings in the quarter were $4.33 billion, or $4.02 a share, up from $3.48 billion, or $3.17 a share, in 2019’s second quarter. Analysts anticipated earnings per share of $3.64.

More on Home Depot

  • Home Depot Braced for Covid Pain—Then Americans Remodeled (Aug. 16)
  • Taking Cover: Tents Are Hot Item as Businesses Reopen Outdoors (June 6)
  • Economy Could Spoil Home-Improvement Party (May 20)

As Americans spent more time at home during the public-health crisis, many turned their attention to home-improvement projects, shifting money they would have otherwise spent on vacations, gym memberships and other activities that have been postponed to prevent the virus’s spread.

Retailers such as Home Depot also benefited from federal stimulus checks to consumers and federally enhanced unemployment benefits. July marked the third straight month that U.S. households’ retail spending increased, according to Commerce Department data. A more recent analysis by research firm GobalData suggests consumer spending may have moderated after the enhanced $600 weekly unemployment benefit expired at the end of July.

Write to Matt Grossman at [email protected]

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