Skip to main content

The Home Depot: Inside the chain’s record quarter

Executives from The Home Depot described the makings of a $30.5 billion quarter on the company’s earnings call this week.

The retailer’s second quarter set a new record for sales and net earnings in a three-month period, with the chain reporting $30.5 billion in revenue and $3.5 billion in net earnings. During the earnings call CEO Craig Menear and executive VP Ted Decker added details. In short, the seasonal sales that were lost in the first quarter by disruptive weather, weren’t really lost at all. They were merely delayed.

The following departments led the way with double-digit comps: lumber, indoor garden, outdoor garden, and electrical.

“Sales to our pro customers grew double-digits,” Decker reported. “Pro-heavy categories like lumber, in-stock kitchens, power tools, windows, and concrete, all recorded double-digit comps.”

Tools and appliances were above the company average of 8%. And all other departments posted a mid-to-high single-digit comp – except for lighting, which had a low-single digit negative comp. The reason, according to Decker, was LED price deflation.

While LED products were going down, other prices were going up. Decker touched on the impact of commodity inflation on lumber, building materials and copper, which together added about 119 basis points to the average ticket.

“In addition to core commodity inflation, we are now experiencing inflation in other areas,” Decker said. “These inflationary pressures come in many forms, including rising raw material costs and transportation costs, along with recently enacted tariffs. However, as the customer’s advocate for value, it is our job to work with our partners throughout the value chain to manage these pressures.”

As Home Depot’s coffers grew, its footprint did not. The company finished the quarter with 2,286 stores – only one more than it started the quarter with.

Among the other stats and developments:

• Online sales grew approximately 26%, compared to the prior year quarter. “Customers continue to respond to ongoing investments and enhancements we are making in support of the customer experience,” said Menear.

• Big-ticket sales were up in a couple of ways. First, the company revised its definition of “big ticket” to transactions over $1,000. It used to be $900. These four-figure transactions were up 10.6%. “A few drivers behind the increase in big-ticket purchases were vinyl-plank flooring, appliances, and strength with our Pro customers,” said Decker.

• The company implemented a wayfinding sign and store refresh package in more than 500 stores.

• Menear pointed to new delivery capabilities: “We’ve now rolled out small parcel Express Delivery from store via car and van in nearly all of our major markets in the U.S., with plans for further expansion,” he said.
This ad will auto-close in 10 seconds