Home Depot Reports Solid Sales Growth -- 2nd Update

By Ezequiel Minaya 

Home Depot Inc. continues to show that shoppers are more willing to spend on upgrading their homes than their wardrobes.

The home-improvement retailer posted a 5.1% sales increase at stores open more than a year, including a 7.3% gain in the U.S. The strong showing comes as several retailers like Macy's Inc. and Nordstrom Inc. have raised concerns about consumer spending heading into the holiday season.

Those headwinds facing department stores don't appear to be hurting chains like Home Depot and Lowe's Inc., which reports third-quarter earnings Wednesday. Home Depot Chief Financial Officer Carol Tome said Tuesday that home values are increasing, more homes are changing hands, and more households are being formed--all trends that work in favor of people spending more at its stores.

"We're in the space of people improving their homes," Ms. Tome said in an interview Tuesday. "We're in a good space."

Shares of Home Depot, up 21% so far this year, rose 4% in recent trading to $125.77.

The comments come as retailers prepare for the busiest shopping period of the year, and investors have been spooked by comments from retailers about sales trends and a build up of inventory that could lead to heavy discounting.

Home Depot and Lowe's see their busiest periods in the spring, but are still taking part in the holiday frenzy with Black Friday deals on seasonal decor and appliances.

Overall, for the third quarter, the company posted a profit of $1.73 billion, up from $1.54 billion a year earlier. Revenue rose 6.4% to $21.82 million. The sales gain was lifted primarily by a 4.4% increase in customer transactions, while the average size of each purchase rose slightly to $58.03 from $57.55 a year earlier.

After the quarterly results, Home Depot now sees sales and earnings rising at the high-end of previous forecasts for the year.

Write to Ezequiel Minaya at [e-mail]

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(END) Dow Jones Newswires

November 17, 2015 15:09 ET (20:09 GMT)

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