Home Depot’s second quarter beats forecasts

NEW YORK – Homes are getting a lot of TLC from their owners of late, which means better sales for businesses like Home Depot.

The world’s largest home improvement retailer reported second-quarter results on Tuesday that surpassed Wall Street expectations, thanks largely to consumers opening their wallets. But Home Depot knows it’s a change in mindset that is spurring homeowners to action.

“When consumers believe their home is an investment and not an expense, they spend differently,” Chief Financial Officer Carol Tome said during a conference call.

Americans definitely have reasons to start feeling better about their homes: Home values are improving, mortgage rates remain low and the job market is healthy.

These factors are contributing to Home Depot’s customers walking through its doors more often – and spending more once they’re inside.

Home Depot said the average receipt during the second quarter was $59.42, a 1.7 percent increase, and the number of transactions rose 2.6 percent.

Chairman and CEO Craig Menear said the consumer was the driver of the average receipt performance during the quarter, with it being the highest quarterly average receipt since 2006.

Sales at stores open at least a year, a key indicator of a retailer’s health, increased 4.2 percent in the period. In the U.S., these sales gained 5.7 percent.

Edward Decker, executive vice president of merchandising, said some of the departments with the best performances during the quarter included appliances, tools, decor and lighting.

Transactions for receipts over $900 rose 6.3 percent in the quarter. Decker said these receipts included items such as water heaters, windows, appliances and riding mowers.

Home Depot’s upswing comes amid continued signs from the real estate market that conditions are getting better.

For the three months ended Aug. 2, Home Depot’s second-quarter revenue increased to $24.83 billion from $23.81 billion. That’s better than the $24.66 billion analysts had expected, according to Zacks Investment Research, and it was the sixth consecutive quarter of sales growth for the Atlanta company.

The chain earned $2.23 billion, or $1.73 per share, for the period. Stripping out the costs of a data breach the company suffered last year and a gain on the sale of the remaining part of its equity ownership in HD Supply Holdings Inc., earnings were $1.71 per share, a penny better than Wall Street had expected. It was also better than the $2.05 billion, or $1.52 per share, that Home Depot reported last year during the same period.

Home Depot’s shares hit an all-time high of $123.80 in morning trading.

Rival Lowe’s Cos. will report its financial results today.