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Home Depot reported a blockbuster second quarter on Tuesday, leaving no doubt that despite stratospheric unemployment and uncertainty about when the COVID-19 pandemic will loosen its grip, there is at least one area where American shoppers are splurging: where they live.
The home-improvement chain said that domestic same-store sales rose 25% in the quarter that ended in early August, roughly twice as much as Wall Street expected. The company’s total revenue was $38.1 billion in the quarter.
“Home is definitely the one place people are spending money on,” Edward Jones analyst Brian Yarbrough tells Fortune. “People aren’t going on vacation, so instead of spending that $5,000 or $10,000 on vacation, people are putting it into their homes.”
Home Depot also benefited from a resurgence in business from contractors once limitations stemming from COVID-19 lockdowns were lifted in May. It saw customers spend more per visit and visit more often. And encouragingly for Home Depot, business this month has been similar to recent months, according to executives on a conference call, despite the end of stimulus checks for consumers.
CEO Craig Menear said several factors explain why home spending is proving to be so resilient.
“The home has never been more important to the customer,” Menear said on an earnings call. “We’re all spending lots of time there; we’re seeing things that need to be done or things that you want to be done. There is additional wear and tear.”
What’s more, Home Depot got a lift from record low mortgage rates that is spurring the housing market, and by extension the need for renovations. Rival chain Lowe’s will report its quarterly results on Wednesday.
Despite spending $480 million in the quarter on incentives and efforts to clean stores more frequently, Home Depot’s bottom line also soared: Net income rose 24.5% to $4.33 billion, also ahead of Wall Street forecasts.