Home Depot sales continued to climb through the third quarter with the U.S. housing market red hot.
Revenue rose 9.8% to $36.82 billion, exceeding the $34.97 billion Wall Street expected, according to a survey by Zacks Investment Research.
Sales at stores open at least a year, a key gauge of a retailer's health, jumped 6.1%, also better than expected, Home Depot said Tuesday. Those sales rose 5.5% in U.S. stores.
While the number of customer transactions slipped 5.5%, the average receipt rose 12.9% to $82.38.
Some of those bigger shopping trips involved people prepping their homes for the winter season, but also higher prices because of snarled supply chains and shortages as the U.S. economy emerges from the pandemic, said Neil Saunders, managing director of GlobalData.
"Part of the uplift can also be attributed to inflation which has pushed prices up across many categories, providing a healthy boost to sales," Saunders said.
While the company is weathering the effects of higher costs so far, they could become a bigger hurdle.
"As the company moves solidly into the new year, things get a little tougher," Neil Saunders, managing director at GlobalData, said in a note. "We believe higher costs -- especially from heating and fuel -- will start to bite on consumer spending."
Shares rose 5.73% Tuesday.
Home Depot Inc. earned $4.13 billion, or $3.92 per share, easily topping projections of $3.41, as well as last year's quarterly profit of $3.4 billion.
Hardware stores have been a hub of activity during the pandemic as people working from home took on new projects. Many also moved into new homes with more space for a home office.
Sales of previously occupied U.S. homes bounced back in September to their strongest pace since January as mortgage rates tick higher, motivating buyers to get off the sidelines.
The National Association of Realtors said last month that existing homes sales rose 7% compared with August to a seasonally-adjusted annual rate of 6.29 million units.
In addition, sales of new homes jumped 14% in September to the fastest pace in six months as strong demand helped offset rising prices.
The Commerce Department reported last month that sales of new single-family homes rose to a seasonally adjusted annual rate of 800,000 units last month which was well above what economists had bee expecting.
Part of the retailer's results are being fueled by the strength of the U.S. housing market. In 2021, the housing market U.S. home prices have appreciated steadily, although that growth cooled off slightly in August. Rising home prices often fuel spending on improvement projects, buoying Home Depot's sales.
Information for this article was contributed by Jordyn Holman of Bloomberg News (WPNS).