Home improvement retailer The Home Depot reported a surge in its sales during the second quarter of 2018 as more homeowners choose to age in place and renovate their homes rather than move into a newer home.
Home Depot sales increased 8.4% from the second quarter of 2017 to $30.5 billion in the second quarter this year. The company’s net earnings were $3.5 billion in the second quarter, or $3.05 per diluted share. This is up from $2.7 billion or $2.25 per diluted share for the same period in 2017.
Overall, diluted earnings per share increased 35.6% from last year, and net earnings increased by 31.2%.
“We were very pleased with our record second quarter sales and earnings,” said Craig Menear, Home Depot chairman, CEO and president. “Not only did our seasonal business rebound from the first quarter, but our overall results exceeded our expectations.”
“These results exemplify the outstanding execution of our combined team of store associates, merchants, suppliers and supply chain,” Menear said.
A recent report from AARP showed that nearly 90% of homeowners approaching retirement want to stay in their homes as they age.
But the median age of owner-occupied homes is currently 37 years, according to data from the 2016 American Community Survey from the National Association of Home Builders. This is the same age the association reported last year for 2015, however, it is up six years from 31 years in 2005.
Because many homes are growing older, and new construction is not keeping up with demand, it has caused a surge in the remodeling market, according to NAHB’s report. And as home prices continue to rise, many homeowners also turn to home improvement as an alternative to moving.
Because of this surge, Home Depot updated is fiscal 2018 sales growth guidance and no expects its sales to increase by about 7% annually.
The Home Depot’s competitor home improvement store, Lowe’s, announced it will report its earnings on August 22, 2018, and given the rising trend in home renovations, the company could also report positive results.