Despite strong 2020 comparisons, Home Depot on Tuesday reported second quarter net sales increased 8.1% year over year to $41.1 billion — the first time the retailer has surpassed $40 billion in quarterly sales in company history. Compared to 2019, sales increased 33.3%.
Total comparable sales in the period rose 4.5%, while U.S. comps increased 3.4%, according to a company press release.
The home improvement retailer's operating income grew 9.4% from the year-ago period to $6.6 billion, while its net income increased 11% to $4.8 billion.
Throughout 2020, home improvement retailers reaped the benefits of consumers spending more time in — and investing more money in — their homes.
But even as consumers have begun to venture outside their spaces, demand in the category hasn't dropped off as Home Depot CEO Craig Menear told analysts Tuesday that the retailer continues "to see them engaged in home improvement projects."
Last year, many consumers took on home improvement projects to accommodate their new reality of working and schooling from home. Spending in the category was further bolstered by enhanced unemployment benefits, stimulus payments and inability to take vacations due to the pandemic, GlobalData Managing Director Neil Saunders said in emailed comments.
But now, as the economy has started to open up, it appears fewer consumers are looking to improve their homes. According to GlobalData research, 66% of consumers took on at least one home improvement project in the second quarter, compared to 73% last year.
Those consumers that are looking to improve their homes are taking on larger projects and paying higher prices. While customer transactions decreased 5.8% during the period to 481.7 million, the average ticket price increased 11.3% to $82.48. This is due to a number of factors, according to Chief Operating Officer Ted Decker, including higher inflation in categories like lumber where prices have been elevated, though they have begun to come down recently.
Demand in the professional segment, however, has remained elevated, signaling consumers' willingness to take on larger projects, Menear said.
Home Depot's pro sales outpaced DIY sales for the second quarter in a row, the company said Tuesday.
The pro segment "is an area of strength for Home Depot, especially compared to Lowe's, which may give it the growth edge over the remainder of this year," Saunders said. "Indeed, we believe that the whole home improvement market will become much more reliant on the professional consumer as a growth generator over the next year or so."
And while analysts expect sales growth to slow in the back half of the year when compared against strong 2020 figures, the overall home improvement category is positioned to benefit from recent strength in the housing market.