Home Depot Beats the Street on Sales

Home Depot Inc, the biggest chain of home improvement stores in the world, reported sales that exceeded what was expected bolstered by an improved housing market as well as a mild weather period during the holiday sales quarter that encouraged people to continue with outdoor activities as well as home renovations.

Stock at Home Depot, which raised its quarterly dividend by nearly 17% as well as announcing a share buyback program of more than $5 billion, was up by up to 3.5% in trading during the morning.

Home Depot has benefited from the demand of pent-up homeowners wanting to do repairs and an increased demand for homes following the financial recession of 2008.

Low mortgage rates still exist and a growth in wages, jobs and credit are bolstering the demand to spend more on home renovations as well as other projects.

During the November and December holiday, weather that was warmer than had been predicted help drive sales up at Home Depot across a myriad of categories in the outdoors such as gardening activities and more.

Favorable trends in weather during the quarter helped the sales growth by over $100 million, Ted Decker the merchandising executive vice president said during a conference.

Net sales increased by 9.5% to more than $20.99 billion during the fourth quarter.

Sales at comparable stores, or stores opened 13 months or more were up by 8.9% across the U.S. during the January 31 ending quarter. Analysts as an average expected their sales to increase by 5.3%, according to one research firm.

The latest results were contrary to a broader trend across retail of disappointing holiday quarter sales as many shoppers spent on items that were large ticket items that included renovations at home and automobiles.

Sales for products that cost above $900 were up 11.9% during the quarter, while those below $50 increased by 3.8%. The bigger ticket items like kitchen appliances and machinery helped Home Depot to produce very strong numbers for the quarter when many retailers in apparel and other items did not enjoy the same success.

The building materials, tools and appliances businesses posted comparable sales increases of double digits, while those for paint, outdoor, garden, kitchen and bath were all in the mid single digits.

The strong performance by Home Depot has set a bar that is quite high for its smaller rival Lowes Cos that will reported its quarterly results on Wednesday February 24.

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