Home Depot is raking in the profits, thanks in part to the housing recovery.
In a recent interview, Frank Blake, CEO of the home improvement mega-retailer, told Bloomberg News that rising home prices are causing many homeowners to invest in home improvement projects.
‘As home prices go up, people start going, 'OK, my house is now back to being a significant source of value for me,'’ Blake says in the interview.
A report from Zillow released this week shows that 52% of U.S. homeowners plan to undertake a home improvement project this fall, with most planning to spend around $1,000.
Also driving Home Depot's profits, Blake says, are investment firms that are scooping up properties, fixing them up and then flipping them for profit.
Investors, however, are not necessarily adding high-end features to homes such as granite countertops and stainless steel appliances. Rather, they are looking to retrofit homes with more basic, but durable, built-ins and appliances, as they are looking to hold down costs and flip properties in a short time frame in order to boost profit. Home Depot operates a unit catering to these customers, Blake says.
Blake adds that he expects Home Depot, which saw its second quarter net income jump 17%, to continue to benefit from the trend through the remainder of this year.
Analysts are forecasting that Home Depot's revenue will increase 5.1% this fiscal year to $78.6 billion, according to the report.
For more, check out the Bloomberg News report.