ATLANTA, Georgia: After two years of declining same-store sales, Home Depot finally saw a turnaround in the fourth quarter, fueled by improving customer demand despite challenges in the housing market.

The company reported revenue of US$39.7 billion, up from $34.79 billion a year ago, surpassing analyst expectations of $39.15 billion. Home Depot said an extra week in the quarter contributed approximately $2.5 billion to sales.

Same-store sales, a key indicator of retail performance, rose 0.8 percent, marking the first increase since January 2023. In the U.S., comparable sales grew 1.3 percent, a sharp contrast to Wall Street's forecasted 1.5 percent decline.

Neil Saunders, managing director of GlobalData, highlighted the significance of the rebound.

"The fact that U.S. comparable sales are back in the black after declining for eight quarters or two years is a very clear win for Home Depot, and it suggests that the home improvement market as a whole might finally be reaching the nadir of its more sluggish performance," Saunders wrote.

Customer transactions increased 7.6 percent, with the average purchase rising slightly to $89.11 from $88.87. Following the announcement, shares of Home Depot climbed more than three percent in midday trading.

Home Depot CEO Ted Decker credited the stronger performance to an increase in home improvement spending, despite ongoing challenges in large remodeling projects.

"Our fourth quarter results exceeded our expectations as we saw greater engagement in home improvement spend, despite ongoing pressure on large remodeling projects," Decker said.

Higher borrowing costs and economic uncertainty had previously led homeowners to delay major renovation projects. The housing market, in a prolonged slump since 2022 due to rising mortgage rates, continued to see slow sales. According to the National Association of Realtors, existing home sales fell 4.9 percent in January, while home prices rose for the 19th consecutive month.

Decker noted that fewer homeowners are moving, and many are postponing repairs and upgrades.

"Our surveys over the prior several months show that more than cost of the project and higher rates, the #1 issue people cite is general macroeconomic and even political uncertainty," he said.

Home Depot reported earnings of $3 billion, or $3.02 per share, compared to $2.8 billion, or $2.82 per share, the year before. Adjusted earnings were $3.13 per share, beating Wall Street estimates of $3.04.

Looking ahead, the company expects earnings per share to decline about 2% in 2024, with projected sales growth of 2.8 percent.