Home Depot (HD, Financial) had announced third quarter FY 2014 sales of $20.52 billion, an increase of 5.4 percent from the same period last year. However, analysts on average had expected $20.47 billion. The company has also reiterated its sales growth guidance for the fiscal year 2014 of about 4.8 percent.
The Home Depot reported 21.1 percent increase in third quarter of fiscal year 2014 net earnings of $1.5 billion, or $1.15 per diluted share as compared to net earnings of $1.4 billion, or $0.95 per diluted share during the same period last year. The company also reaffirmed its guidance for fiscal year 2014 diluted earnings per share to increase by 21 percent to nearly $4.54.
A closer look
Home Depot, Inc. faced greater costs linked to an extensive data breach in the beginning of this year, but, its third-quarter sales results illustrates that its customers weren’t worried about the expected security concerns.
The sales growth of the company exceeded the analyst’s expectations propelled by enhanced transactions and higher ticket size.
All of the Home Depot’s merchandising departments registered significantly positive comparisons, with both its pro and consumer businesses illustrating growth.
The U.S. housing market recovery is in line with the analyst’s expectations. Also, the expansion in home prices is exciting and allowing the customers to invest significantly in fixing up their homes.
Same-store sales, or sales at stores introduced at least last year increased 5.2%, whereas U.S. same-store sales expanded 5.8%. Net customer transactions rose 3.2%, and the average ticket grew 2.3%.
Home Depot also registered significant growth in its online business, which is expected to be accelerated by the launch of three fulfillment centers next year. For 2015, the company expects to enhance the delivery from stores for online orders.
Moving in the right direction
Its automated facilities are expected to enhance its online growth, balancing the cost efficiency and speeding the shipments of online orders for meeting the expanded customer requirements.
The company targets on expanding space in its brick-and-mortar locations for online orders with nearly 40% of the company’s Internet sales expanding in a store.
Home Depot plans to repurchase further $1.26 billion in shares in the current quarter after having already bought back $5.74 billion in shares for this year as of now.
Home Depot sales during the quarter slightly exceeded the quarterly sales expectations owing to the enhancing job market, pushing home owners to enhance spending on renovations, still earnings declined slightly arriving just below Wall Street expectations.
According to the research firm Consensus Metrix, sales for stores launched at least a year ago increased 5.2 percent during the third quarter, exceeding the analysts' average estimate of 5 percent.
Same-store sales in the United States grew 5.8 percent, where Home Depot has over 85 percent of its stores.
Conclusion
Home Depot continues to witness significant increase in the store sales for all the categories and thus driving considerable top line growth for the company.
