The Home Depot has reported double-digit sales growth in the fourth quarter driven by higher demand for home improvement equipment.

The company’s sales rose 14.1 per cent to $39.7 billion, with overall comparable sales up 0.8 per cent and US comparable sales up 1.3 per cent.

According to GlobalData MD Neil Saunders, the sales increase is the best performance since the first quarter of 2021, ending a long period of weak topline growth after a surge in demand during the pandemic.

The growth, however, was contributed by the addition of building supplies firm SRS Distribution and an additional week of trading, he noted.

While the improvement in US comparable sales was modest, it followed a long streak of decline. According to Saunders, this suggests that the home improvement market as a whole might finally be reaching the nadir of its more sluggish performance.  

The housing market, which increased 5.8 per cent during the quarter, also spurred demand for home improvement spending – especially on smaller projects and light decoration, the analyst continued.

The number of projects undertaken by non-movers was up 0.8 per cent, representing a turning point after a long period of declining activity. Seasonal and winter categories also performed well in the fourth quarter.

On the bottom line, net earnings were $3 billion compared to $2.8 billion in the year-ago period.

For the full year, sales grew 4.5 per cent to $159.5 billion, with both global and US comparable sales down 1.8 per cent.

The company expects sales to grow 2.8 per cent and comparable sales to increase 1 per cent in FY25.

According to Saunders, the guidance shows that Home Depot is in for a better year. However, the uncertainty over consumer confidence and the impact of tariffs will result in a compressed bottom line in the near term, he added.