Home Depot Inc. raised its outlook for the second time this year, saying the long-running boom in the home-improvement market is getting a new lift from millennials and other first-time home buyers.
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Millennials are "moving into homes, which bodes very well for us and extends the recovery," Chief Financial Officer Carol Tome said in a call with analysts. Along with strong sales of starter homes that often require repairs and renovations, Ms. Tome pointed to an aging housing stock as contributing to the continued healthy demand.
The Atlanta-based company now expects annual sales to grow 5.3%, led by 5.5% same-store sales growth, up from prior guidance of 4.6% growth. For earnings, the company expects a 13% jump compared with an 11% increase forecast earlier.
Home-improvement companies have been reporting rising sales even as other retailers have struggled. Americans are expected to pour a record $316 billion into home remodeling this year, up from $296 billion a year earlier, according to Harvard University's Joint Center for Housing Studies.
During the most recent quarter, sales at Home Depot stores open at least a year rose 6.3%, led by 6.6% growth in the U.S. In all for the three months ended July 30, Home Depot earned $2.67 billion, or $2.25 a share, up from $2.44 billion, or $1.97 a share, a year earlier. Sales increased 6.2% to $28.12 billion.
As e-commerce continues to trample onto traditional retail territory, appliances has been an area of competitive pressure for Home Depot. Sears Holdings Corp. recently struck a deal to sell its Kenmore brand through Amazon.com Inc. Home Depot Chief Executive Craig Menear downplayed the risk to his business, saying customers often prefer to talk to associates in stores before buying large-ticket items like appliances.
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The company's online sales rose 23% in the quarter, representing 6.4% of total sales. Over 43% of transactions on the Home Depot website are picked up in-stores, said Ms. Tome, as Home Depot has ramped up its efforts to integrate online and in-store purchasing options.
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(END) Dow Jones Newswires
August 15, 2017 12:19 ET (16:19 GMT)