ATLANTA (AP) — Sales at Home Depot surged during the third quarter, a period marked by massive rebuilding efforts after severe hurricanes struck Florida and Texas, wildfires consumed entire neighborhoods in the West and earthquakes rattled Mexico.
The Atlanta home improvement retailer is one of the inadvertent winners of catastrophe, including hurricanes Harvey and Irma, which shaved as much as at least one-half of 1 percentage point off annual growth for the U.S. in the same quarter.
Home Depot Inc., which is furnishing a lot of materiel for the recovery, raised its outlook for the year Tuesday.
“The devastation caused by hurricanes and wildfires has been anything but a disaster for Home Depot, with the rebuilding efforts pushing already strong sales growth even higher,” writes Neil Saunders, the managing director of GlobalData Retail.
The company earned $2.17 billion, or $1.84 per share, for the three months ended Oct. 29. That’s 3 cents better than expected, according to a survey by Zacks Investment Research. The company last year during the same period earned $1.97 billion, or $1.60 per share.
Revenue also rose to $25.03 billion, from $23.15 billion, to be analyst projections of $24.52 billion.
Sales at stores open at least a year, a key gauge of a retailer’s health, rose 7.9 percent. In the U.S., they climbed 7.7 percent.
The company attributed about $282 million in same-store sales growth to the hurricanes. It was not unscathed, however, and the storms dinged operating profit by approximately $51 million.
The retailer now anticipates 2017 earnings will rise about 14 percent from a year earlier, to $7.36 per share. That’s about 3 cents better than industry analysts are projecting, according to FactSet.
Revenue is now expected to be up about 6.3 percent, with same-store sales rising approximately 6.5 percent.
It remains difficult to quantify the effect of the U.S. housing market on Home Depot and its rival, Lowe’s Inc., which reports earnings next week.
Construction of new homes fell 4.7 percent in September, the biggest decline in six months, reflecting weakness in both single-family activity and apartment building. The report from the Commerce Department last month shows construction at a seasonally adjusted annual rate of 1.13 million units, which was the sharpest decline since a 7.7 percent fall in March.
Homebuilding has been sliding this year, but economists remain optimistic that the low level of unemployment will soon spark a rebound in sales and construction. Even though construction activity has fallen in recent months, home building is 6.1 percent higher than a year ago.
Housing trends are just the start, however, and it’s likely to be a busy call with analysts later on Tuesday.
“We’ll be listening for commentary regarding the future impact of recent natural disasters in the US and Mexico, home-buying and home improvement spending trends among millennials, an update on (Home Depot’s) e-commerce initiatives, holiday plans and expectations, and the management’s view on the potential impact of changes to the US tax code or to NAFTA,” wrote Kate McShane, an analysts with Citigroup.