Home Depot Reports Increased Sales in Q3 and Improved Annual Outlook

Helped by the weather and a recent business acquisition, retailer Home Depot reported that sales increased by over 6% in the third quarter. The strong sales in Q3 spurred the retailer to raise its annual outlook.

Revenue for the quarter reached $40.22 billion, just over analysts’ expectations of $39.32 billion. However, net income fell from $3.81 billion to $3.65 billion.

For the full-year outlook, Home Depot anticipates total sales will rise 4%, versus its previous projection of 2.5%-3.5%. The improved prediction takes into account an extra sales week in the fiscal year as well as revenue from SRS Distribution, which Home Depot purchased earlier this year.

“There is demand for remodeling, and they are putting it on hold until they see a more favorable financing environment,” Home Depot CFO Richard McPhail told CNBC. “And so the demand is there, the question is, when it’s unlocked.”

Home Depot forecasts comparable sales for the year to drop 2.5%. Previous projections predicted a higher drop of 3% to 4%.

Momentum for Home Depot

The weather may have contributed to the positive Home Depot numbers in the quarter. Hurricanes Helene and Milton created a sales bump in the quarter as generators, batteries, and plywood were needed items prior to the storms. Then, after the hurricanes, consumers and contractors rushed to purchase supplies and materials for repairs.

Home Depot may see some future growth as consumers get more comfortable spending. Recent Federal Reserve rate cuts may indirectly affect the interest charged on consumer and real estate loans, such as mortgages. If the cost to borrow money gets lower, consumers will possibly be motivated to spend on home improvement projects that were previously put on hold.

The hardware giant is also betting on professional contractors and construction companies to boost profit. Home Depot invested $18.25 billion in a deal to buy SRS Distribution. The Texas-based company focuses on selling materials for roofers and other specialized contractors.

“SRS has built a robust and successful platform that will accelerate our growth with the residential professional customer while presenting future opportunities with the specialty trade pro,” Home Depot CEO Ted Decker said at the time, per USA Today.