Home Depot Q3 beats estimates; boosts annual outlook
The Home Depot racked up another quarter of solid sales and earnings gains fueled by continued strong demand in the home improvement market.
The world’s largest home improvement retailer reported sales of $26.3 billion for the quarter ended Oct. 28, up 5.1% from the year-ago period. Analysts had expected sales of $26.2 billion. Global comp-store sales were up 4.8%, and comp sales in the U.S. were up 5.4%. Global comp-store sales were up 4.8%, and comp sales in the U.S. were up 5.4%.
Net earnings for the third quarter of fiscal 2018 were $2.9 billion, compared with net earnings of $2.2 billion in the same period of fiscal 2017. Earnings per share were $2.51, easily topping the $2.26 analysts had expected.
“We are pleased with our third quarter results and the growth that we saw from both our professional and do-it-yourself customers,” said president and CEO Craig Menear. “We saw continued strength across the store, as well as healthy growth in our digital business. We believe this is a testament to the overall strength of demand in the home improvement market.”
Other data from the company’s third-quarter earnings report:
• Customer transactions: 394.8 million, up 1.4% from 17Q3;
• Average ticket: $65.11, up 3.6% from 17Q3; and
• Sales per square foot: $433.99, up 5.2% from 17Q3.
Analyst Neil Saunders of GlobalData Retail commented that Home Depot’s performance was particularly impressive given that the housing market experienced a slump in sales of both new and existing homes during the quarter. He also noted that Home Depot will be a beneficiary of the ongoing demise of Sears, especially in categories like appliances.
“From our data, 62% of current Sears customers say they would consider Home Depot as an alternative for appliances which is far higher than the consideration for other home improvement retailers,” Saunders said. “This, along with improvements to ranges – including the introduction of Bosch branded products – will provide a nice upside to growth over the next couple of quarters.” For more of Saunder’s comments, click here.
For the year, which will have 53 weeks of sales, Home Depot raised its expectations for sales growth to about 7.2%. It was 7.0% previously. It also expects comp sales of about 5.5% for the comparable 52-week period.
At the end of the quarter, Home Depot operated 2,286 stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.
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Bebe Stores in joint venture to acquire European retailer
Bebe Stores is in buying mode.
The company said it formed a joint venture, GAEBB Group, with Great American Group LLC to to purchase the assets of European fashion retailer Charles Vögele GmbH. The purchase price was not revealed.
The deal comes on the heels of Bebe’s acquisition of bankrupt Brookstone. On October 22, 2018, Austrian insolvency administrators approved the Charles Vögele restructuring plan. As part of the restructuring plan, GA Europe, a division of Great American Group, is executing a store closure program which will enable the retailer to focus on its remaining profitable operations. This deal broadens Great American Group’s footprint across Europe with expanded presence in Austria, Slovenia and Hungary.
“We are excited to partner with GA Europe on this opportunity,” said Manny Mashouf, CEO of bebe stores. “Charles Vögele has a strong reputation in the consumer marketplace, and I believe our combined expertise allows us to take this unique investment opportunity and realize the value of this brand.”
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