Home Depot says rebounding home values are prompting consumers to spend more on their houses again, which should lead to bigger sales and profit gains for the chain the rest of the year.
The company said in its first quarter earnings report Tuesday that its data — including stronger appliance sales and more big-ticket checkouts from professional customers — point to rising spending on existing dwellings instead of new homes.
“We get this confidence (in the housing recovery) by looking at our own business,” said Carol Tome, the company’s chief financial officer.
Home Depot’s take on the housing recovery is an important indicator because of the company’s, and its competitor Lowe’s, share of the home building market.
Spending on home fix-ups was offset by bad weather in the first quarter, however, Home Depot said. Same-store sales rose 2.6 percent over the same period of 2013, but overall sales fell short of analyst expectations because of bad winter and early spring weather in the midwest and northeast.
Chief Executive Officer Frank Blake told analysts during a call Tuesday that the company thought it would avoid the effects of cold weather this year that it got in 2013.
“Instead, much of the United States and Canada had an even colder spring, and this has had a significant impact on our sales,” he said.
Quarterly profit rose $1.4 billion, or $1 a share. That compared to $1.2 billion, or 83 cents a share, during the same time last year.
The company said it expects full-year sales growth of 4.8 percent over 2013, with per-share earnings up about 17.6 percent to $4.42 for the year.
Home Depot also said it will repurchase $3.75 billion in additional shares throughout the rest of the year. Share repurchases can boost earnings per share.
Metro Atlanta home sales ticked down 6.8 percent in April from the same month a year earlier. But the median price rose 11.1 percent to $210,000.
Whether home sales pick up depends on factors including mortgage rates and credit access, the company said.
“We continue to believe that home appreciation, affordability and an aging housing stock in need of investment will continue to drive growth,” Blake said.
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