Home Depot had sales of $38.9 billion during the first quarter of its fiscal year, powering through inflation with a continued surge of demand from consumers who want to buff up their homes, the company reported Tuesday.
Revenues during the three months ending April 30 were 3.8% higher than the same period a year earlier, as the Vinings-based company recorded net earnings of $4.2 billion.
"Fiscal 2022 is off to a strong start," said Ted Decker, the company's chief executive during an hour-long conference call with analysts and reporters. "The solid performance in the quarter is even more impressive as we were comparing against last year's historic growth."
In the early months of the pandemic, consumer spending shifted dramatically toward buying goods, especially for homes where many workers were effectively trapped — a trend that sent Home Depot sales soaring.
Last year, Home Depot sales topped $150 billion, and the return of consumer spending on services has not undercut that trend, Decker said.
Moreover, while inflation has added to what average consumers spend at Home Depot, it hasn't yet cooled their appetite for home improvement, he said. "The customers' engagement is much more resilient than we thought."
The company said it has become more optimistic about the coming year's business. Officials told analysts that they expect sales to grow at about a 3% rate during the current fiscal year.
Home Depot operates 2,316 retail stores, including some in Canada and Mexico. The company has about 500,000 employees.
Home Depot's business is divided between do-it-yourselfers and professional contractors, but ultimately, demand is driven by rising home values and a market in which many people prefer investing in home improvement to looking for another place to live, said Richard McPhail, the company's chief financial officer.
The base for Home Depot's business is the 130 million housing units in the United States, he said.
Average U.S. home values are up more than 30% in the past two years, and owners' equity in their property has climbed even more, McPhail said. "The homeowner has never had a balance sheet that looks like this."
Interest rates have more than doubled since December, effectively crimping the purchase power of buyers. But for homeowners who are paying a fixed-rate for their mortgage or who have no mortgage at all, the ascending rates are irrelevant, McPhail said.
"The vast majority are not thinking about mortgage rates," he said.
Home Depot stock peaked late last year at more than $415 a share before sliding along with much of the market to drop below $283 recently. Home Depot shares rose in early trading Tuesday to more than $310 before falling as the morning went on.
Home Depot stock close up 1.7% at $300.95 a share.
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The Home Depot's revenues by quarter in billions
Fiscal year 2022
Q1: $38.90
Fiscal year 2021
Q4: $35.72
Q3: $36.82
Q2: $41.12
Q1: $37.50
Fiscal year 2020
Q4: $32.26
Q3: $33.54
Q2: $38.05
Q1: $28.26
Fiscal year 2019
Q4: $25.78
Q3: $27.22
Q2: $30.84
Q1: $26.38
Sources: The Home Depot, MacroTrends
