(Staff and Bloomberg)—Home Depot Inc. offered more evidence that the U.S. housing market is still humming along, reporting growth in its second-quarter sales.
Second-quarter online sales were up 26% year over year, according to CEO Craig Menear in a transcript obtained from Seeking Alpha. That’s driven by a higher conversion rate, says executive vice president of merchandising Ted Decker. Exact figures were not disclosed.
Home Depot, No. 7 in the Internet Retailer 2018 Top 500, is continuing to hone its omnichannel efforts, adding lockers for buy-online-pickup-in-store purchases, as part of an overhaul of all of its stores. In the last quarter, 47% of online orders were picked up in store.
The home-improvement chain said same-store sales increased 8% in the three months ended July 29, topping the projected 6.5% increase compiled by Consensus Metrix. That was welcome news for investors after results disappointed in the previous quarter, with a longer winter pushing off outdoor renovations.
Home Depot and its smaller rival Lowe’s Cos., No. 21 in the Top 500, are often seen as proxies for the health of the housing sector because property owners spend more on their homes when they believe values are rising. But for several quarters there’s been increasing concern that years of robust home-price gains are cooling. For its part, Home Depot has continually said that a shortage of available homes in many markets would actually underpin higher home-improvement spending.
When Home Depot said that its first-quarter results were hurt by prolonged cold temperatures and snow, it added that property owners had embraced big projects as the weather warmed up in May.
“Not only did our seasonal business rebound from the first quarter, but our overall results exceeded our expectations,” Menear said in a statement Tuesday.
The company increased its annual forecast, expecting to grow 2018 sales by 7%. It had previously projected sales growth of 6.7%.
There were plenty of mixed signals within housing data during the second quarter. While housing price gains slowed from earlier in the year, they still rose 5.3%, according to the National Association of Realtors. Prices also climbed in 161 of 178 metropolitan areas measured.
More homeowners also put properties on the market in June, reversing three years of annual inventory declines, the association said. That could create a glut of properties, which would be a drag on prices. But it could also mean more first-time homeowners and lots of potential new customers for Home Depot.
Simeon Gutman, an analyst with Morgan Stanley, said that while the U.S. housing industry may be nearing the end of its boom, “the broad macro backdrop is strong.” Home Depot will see more comparable-sales growth in the low to mid-single digits for a “protracted period,” he wrote in a research note.
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