Home Depot results surprise

Home Depot Inc.’s second-quarter results beat Wall Street estimates even as the U.S. housing market shows signs of cooling off.

The home-improvement retailer on Tuesday reported comparable sales growth of 5.8% in the three months ended July 31, topping the average analyst estimate of 4.6%. Revenue and earnings also beat expectations.

The pandemic housing boom is starting to abate in the U.S., slowed down in part by rising mortgage rates, as well as the elevated costs of materials and labor.

Government data released Tuesday showed new U.S. home construction fell in July by more than forecast, to the slowest pace since early last year.

Despite these headwinds, Home Depot said project backlogs remain healthy and strong sales trends have continued into the current quarter.

Shares of Home Depot rose 1.7% in New York trading at 9:55 a.m., erasing an earlier decline in premarket trading. Rival Lowe’s Cos., which reports earnings Wednesday, climbed 1.1%.

Home Depot reiterated its guidance for the rest of its fiscal year, including comparable sales growth of about 3%.

The company told analysts on a conference call that it’s taking a conservative approach to the forecast due to economic uncertainty.

The results point to comparable sales growth of around 1% for Lowe’s, below the average analyst estimate of 2.3%, said Michael Baker, a DA Davidson & Co. analyst, in a note to clients.

Home Depot has a greater exposure to professional contractors, who are more resilient to the pinch of inflation than do-it-yourself customers.

The retailer said it saw some weakness from do-it-yourself buyers last quarter.

Home Depot said it saw 3% fewer customer transactions last quarter than a year ago, its fifth-straight quarter of declines.

Amazon.com accused the Federal Trade Commission of harassing its founder Jeff Bezos and the company’s Chief Executive Officer Andy Jassy as it probes the e-commerce giant’s business practices.

Amazon accuses FTC of harassmentIn a filing made public on Monday, Amazon claimed that FTC staff have made “unduly burdensome” demands as the agency investigates whether the company’s subscription services, including Amazon Prime, violate consumer protection laws.

The online retailer is seeking to quash or limit the FTC’s most recent civil investigative demands, which are similar to subpoenas.

Amazon said the FTC’s requests are “unworkable for Amazon to discern the information staff demands and to respond in the timeframe allowed.”

The FTC, which has both antitrust and consumer protection mandates, has been investigating Amazon for potential anticompetitive conduct for several years.

The filing offers an unusually public glimpse into the ongoing struggle between one of the world’s biggest companies and one of its regulators.

FTC Chair Lina Khan, who took over the position in June 2021, has escalated the investigation, shaking up the team, re-interviewing potential witnesses and asking questions about the company’s recent acquisition of MGM Studios, Bloomberg reported in May.

From wire reports

The FTC declined to comment.

Amazon has taken a particularly antagonistic approach as it faces scrutiny from the FTC, said Maurice Stucke, a former prosecutor in the Justice Department’s antitrust division who now teaches law at the University of Tennessee.

Stucke pointed out that Amazon previously attempted to force Khan to recuse herself from the Amazon investigation altogether.

“Generally, this approach over the long run is not workable,” said Stucke, comparing Amazon’s approach to Microsoft’s stance in the 1990s as it faced antitrust scrutiny from the Justice Department. “The day of reckoning for Amazon is coming.”