Home Depot signals lumber prices will remain ‘volatile’
Home Depot posted a quarterly net profit $3.4 billion, or $3.21 per share.
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Home Depot signaled the swings in lumber prices plaguing builders are not going to abate anytime soon.
"When lumber hit those extraordinary highs in the early part of last year, we saw a dramatic unit productivity fall off, and then we also saw a very quick fall off in lumber prices," Home Depot's chief operating officer and incoming CEO Ted Decker told analysts on the company's fourth quarter earnings call Tuesday. "As lumber prices have recovered through this quarter, we are starting to see some unit pressure on lumber."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| WOOD | ISHARES TRUST S&P GLOBAL TIMBER & FORESTR | 79.45 | +0.88 | +1.12% |
| CUT | INVESCO EXCHANGE TRADED FD TR II MSCI GLOBAL TIMBER ETF | 32.12 | +0.20 | +0.64% |
According to Decker, prices for framing lumber in the fourth quarter alone ranged from approximately $585 to over $1,200 per thousand board feet, an increase of more than 100%. He emphasized that lumber prices "remain volatile."
LABOR SHORTAGE HAS HOME DEPOT PUSHING ‘ACCELERATED HIRING PROCESS’
Home Depot stock finished down nearly 9% at the end of Tuesday's trading session despite the home improvement retailer reporting strong quarterly sales growth.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| HD | THE HOME DEPOT INC. | 335.36 | +2.47 | +0.74% |
Fourth-quarter sales were $35.7 billion, an increase of $3.5 billion, or 10.7% year-over-year. Comparable sales for the quarter jumped 8.1%, with U.S. comparable sales climbing 7.6%. Home Depot posted a quarterly net profit $3.4 billion, or $3.21 per share, compared to $2.9 billion, or $2.65 per share, a year ago. Analysts surveyed by Refinitiv were expecting earnings per share of $3.18 and net sales of $34.87 billion.
The home improvement retailer posted fourth quarter sales of $35.7 billion, an increase of $3.5 billion, or 10.7% year-over-year. (Getty Images / Getty Images)
Departments with above-average comps included plumbing, electrical, building materials, millwork, decor and storage and paint. Meanwhile, kitchen and bath was in line with the company average and hardware, tools, lumber, flooring, appliances and garden were positive but below the company average.
Home Depot’s total customer transactions during the quarter fell to 402.5 million from 416.8 million a year ago. However, the average ticket rose to $85.11, compared to $75.69 a year ago. Growth in its average ticket was driven primarily by inflation as the cost of lumber, building materials and copper rose.
Big-ticket comp transactions, which are those over $1,000, rose 18% compared to the same period last year. Sales growth from home professionals outpaced do-it-yourself customers during the three-month period ending Jan. 30.
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Looking ahead, Home Depot is anticipating sales growth and comparable sales growth to be "slightly positive" and diluted earnings-per-share-growth to be in the "low single digits." Home Depot chief financial officer Richard McPhail noted that the company has set a goal to reach $200 billion in annual sales, but did not disclose specific timing for reaching that goal.
"We intend to get there as soon as we can in a sustainable and profitable way," McPhail said.
Along with its earnings results, Home Depot disclosed that its board of directors has approved a 15% increase in its quarterly dividend to $1.90 per share, which equates to an annual dividend of $7.60 per share. The dividend is payable on March 24 to shareholders of record as of the close of business on March 10.