Sales at Home Depot, Lowe’s Beat Estimates as Higher Home Prices Boost Spending

Both Home Depot and Lowe’s, the two leading home-improvement retailers, beat Wall Street estimates in the latest quarterly results, a positive sign for the housing market as more homeowners gain equity and spend more on renovations.

Home Depot on Tuesday said comparable-store sales for its fiscal second-quarter, which ended Aug. 3, increased  5.8 percent from a year earlier. That beat projections of 4.5 percent or lower.
Lowe’s on Wednesday reported that second-quarter comparable sales jumped 4.4 percent, surpassing Wall Street estimates of 4 percent.
However, the company lowered its total sales guidance for 2014 to growth of 4.5 percent from the previous range of 5 percent. For the year, Lowe’s sees comparable sales for the year to jump by 3.5 percent. The second-largest home-improvement retailer trimmed revenue forecast after weaker-than-anticipated sales of air conditioners in the cooler summer.
Results for Lowe’s beat analysts’ expectations, but they weren’t as impressive as Home Depot’s. Net sales increased at the same pace as Home Depot’s, and the gross margin actually grew at a faster pace. Still, a rise in expenses slowed earnings growth.
Both Home Depot and Lowe’s pointed to rising real-estate prices as a key factor for growth because higher home values prompt consumers to spend more home renovation projects.
Home prices have been consistently gaining for more than two years, but the growth slowed to a 4.4 percent gain last quarter from an increase of 8.8 percent in the first quarter, according to the National Association of Realtors.
Price appreciation is easing as more properties are listed for sale and buyer demand slows, the Realtors said.

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