Home Depot's big-ticket sales pick up despite tariffs and interest rates

Driving the news: The Atlanta-based retailer posted a 1% increase in comparable sales for the second quarter, trailing consensus estimates of 1.5%, according to Bank of America analysts.

• Total customer transactions fell 0.9%, but the average ticket size rose by 1.2%.
• The company maintained its full-year sales and earnings guidance.

Zoom in: Home Depot recorded a 2.6% increase in comparable purchases of more than $1,000, CEO Ted Decker said on an earnings call.

• "These may be shallow gains, but they show a material strengthening over the last quarter and provide confidence that the slump in home improvement is finally over," GlobalData analyst Neil Saunders wrote Tuesday.
• The company's stock was up 3.6% in morning trading.

The big picture: The earnings release came the same day the federal government reported that U.S. housing starts hit a seasonally adjusted five-month high of 1.428 million units in July.

Yes, but: Tariffs and interest rates continue to undermine remodelers and home builders.

• "Our customers still tell us that the rate environment is giving them pause on larger remodeling projects that would typically require debt financing," Home Depot's chief financial officer, Richard McPhail, said on the earnings call.
• But the retailer's professional customers say "their customers tell them they're deferring projects, they're not canceling projects," McPhail added.

What to watch: Tariffs will lead to "some modest price movement in some categories, but it won't be broad based," William Bastek, executive VP of merchandising, said on the earnings call.

• And he noted that more than half of Home Depot's products are sourced domestically.