After a solid first quarter, Home Depot has posted an even stronger set of second quarter figures. Total sales rose by 6.2% with underlying comparables up by 6.3% overall and by 6.6% in North America. Given the long run of big uplifts in same-store numbers, this is a very impressive performance.

In our view, some beneficial factors are underpinning Home Depot’s growth. When combined with the company’s operational excellence and the sound strategic decisions it has made, these are driving exceptional performance. In a sense, everything is perfectly aligned for growth.

Regarding the tailwinds, foremost among these is the housing market which, for most of the quarter, remained robust in terms of both transactions and prices. Movers are highly beneficial for the home improvement market: our figures show that, on average, movers spend 68% more on DIY than other consumers. The vast majority of movers — some 84% — say that Home Depot is one of the stores they will use most for their home improvement activities. In essence, Home Depot has been the main beneficiary of a strong housing market.

As positive as the housing market has been, there is a risk that activity will wane. Indeed, the latest numbers suggest that transactions are down slightly — not because demand has dropped off, but because there is a shortage of housing. This both reduces options for those wanting to move and also pushes up prices which restrict the number of first-time buyers. Looking ahead it is likely that supply will pick up and that prices will drop back a little; in our view,…