(CBS/CNN) — The housing market is booming. This is great news for Home Depot — and its employees.
The Home Depot reported better-than-expected sales and profits on Tuesday, and the company plans to invest $1 billion a year in increased worker benefits. This is on top of the $1.7 billion in benefits the company has already granted this year in response to Covid-19.
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Home Depot unveiled temporary programs during the coronavirus pandemic, such as extended paid time off and weekly bonuses. But the company has decided to give hourly workers a permanent pay rise as the housing market continues to boom.
In the Boston area, Home Depot is looking to fill more than 1,000 retail positions in stores. Openings include full-time and part-time positions in customer service and overnight freight, as well as online and curbside order fulfillment. Applications can be completed online at careers.homedepot.com/hiring.
Sales at stores open for at least a year jumped 24% in the third quarter. And Home Depot reported net income of $3.4 billion, an increase of more than 20% from a year ago.
“[T]he investments we have made in the business as well as our associates’ focus on customers…are critical to enabling market share growth in any economic environment,” said CEO Craig Menear in the company statement. Press release.
Home Depot shares fell 3% on Tuesday after the news, but the stock is up nearly 25% this year.
The Home Depot is booming during the pandemic as many consumers focus on home improvements at a time when they may be less willing (or able) to spend on leisure activities such as dining out or shopping. family trip.
“Home spending remains a priority,” Neil Saunders, chief executive of retail research firm GlobalData, said in a report.
“Savings from lower spending on travel, dining out and not taking vacations gave consumers a pool of cash that they diverted to household projects and activities,” Saunders said. “Improvement continues to be at the forefront of spending.”
Home Depot chief financial officer Richard McPhail echoed that sentiment during a conference call with analysts on Tuesday.
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“We are encouraged by consumer sentiment and consumer trends, which show that home improvement is receiving more than its historic share of consumer spending,” he said. “Housing metrics are significantly stronger than when we entered this crisis.”
A bet that the housing market still hasn’t peaked yet
The Home Depot results come a day after the company announced plans to buy out HD Suppl, a former subsidiary that focuses on selling building materials to homebuilders, apartment managers and the hospitality industry. , for more than 8 billion dollars.
Home Depot sold the business to private equity firms in 2007, and there have recently been rumors that Home Depot rival Lowe’s, which will release its latest results on Wednesday, was interested in buying HD Supply.
The acquisition of HD Supply is a clear sign that Home Depot is optimistic about the outlook for housing. And the news can only get better. The Mortgage Bankers Association said in a report on Tuesday that it was raising its forecast for new home loans in 2021.
The MBA now expects purchase loans to hit $1.59 trillion next year, up 12% from 2020 and topping the all-time high of $1.51 trillion in new home loans from 2005.
Housing prices could also continue to rise. Many people, especially in cities, are looking to move to the suburbs for more space, especially as working from home is becoming more common.
“There should be resilience in housing. There is pent-up lagging demand contributing to the strength in home prices,” said Kenon Chen, executive vice president of Clear Capital, a real estate valuation and technology firm.
Chen added that there is also not a glut of homes on the market in many key markets. This should further support prices.
“We have low supply, low interest rates and the continued trend of remote working,” he said.
(© Copyright 2020 CBS Broadcasting Inc. All rights reserved. CNN’s Paul R. La Monica contributed to this report.)
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