Hurricane-struck Americans spent nearly $300 million at Residence Depot

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Source:   —  November 14, 2017, at 3:52 PM

There was one huge winner this hurricane season: Residence Depot.

Hurricane-struck Americans spent nearly $300 million at Residence Depot

There was one large winner this hurricane season: Residence Depot.

Homeowners and contractors rushed into the residence improvement store to storm-proof houses before Harvey, Irma and Maria. Then they raced back after the storms hit to repair blown-off roofs, shattered windows and flooded bedrooms.

Hurricane-affected customers spent $282 million in plywood, lumber, bricks, drywall, power generators and roofing material, lifting Residence Depot'south overall sales to $twenty-five billion latest quarter. That'south an eight percent expand from the same time latest year, the company reported on Tuesday.

Even though income grew, the hurricanes took a bite out of Residence Depot'south profit. Several stores in the hurricane zones were forced to near stores, and they faced shortages as a result of supplier delays.

Also, profit margins on hurricane-related products are tighter than the goods the company typically sells. Plywood and lumber are competitive commodities and only have profit margins of around twenty%, while the everyday items Residence Depot sells love power tools and accessories can have margins upwards of fifty%, explained Wedbush Securities research director Seth Basham.

Residence Depot'south profit still rose by nearly eleven percent over the prior year, but it'd have been even higher without catastrophe expenses, estimated GlobalData Retail director Neil Saunders.

Residence Depot (HD) gained one percent on Tuesday and is up nearly 25 percent this year. It'south one of the few shining spots in a bleak retail landscape.

Both Residence Depot and rival Lowe's (LOW), which has gained ten percent this year, are benefiting from a powerful housing recovery.

Total residence sales and residence prices continue to rise, boosting spending on renovations and upgrades. Residence values are up 6.5 percent in two thousand-seventeenth compared to the same period latest year, according to Lawrence Yun, chief economist at the National Organization of Realtors.

Residence Depot looks love it's Amazon- and Walmart-proof and largely immune to online shopping'south disruptions to traditional retailers.

People have proven willing to go to physical stores to purchase residence improvement products and tools, particularly contractors and builders.

"The residence improvement sector continues to paint a better outlook as it sidesteps broader retail woes," said Moody'south Vice President Bill Fahy.

Residence Depot is in position to gain from other retailers' struggles.

For example, as Sears continues to lose its stronghold on appliances, tools and outdoor products, Home Depot could be the main beneficiary, predicts Saunders.

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