Home Depot to invest $1 billion in employees
The Home Depot is boosting its employees' pay amid a still tight labor market for retailers.
The home improvement giant announced the increased compensation in its fourth-quarter earnings release in which it provided a flat outlook for the coming year. In another disappointment, Home Depot’s quarterly revenue missed analysts’ expectations for the first time since November 2019.
Calling its employees “a key differentiator and competitive advantage for the company,” the retailert said it will invest in wage, benefits, training, and career development for its associates. Beginning in the first quarter of fiscal 2023, Home Depot will invest an additional approximately $1 billion in annualized compensation for frontline, hourly associates. (At the end of the fourth quarter, the company had a total of approximately 475,000 associates.)
According to CNBC, hourly workers will see the increase, effective as of Feb. 6, this month in their paychecks. The increase will boost pay for all hourly workers in the U.S. and Canada, according to the report. The company did not say how much of a pay raise the average hourly worker will receive.
"The most important investment we can make is in our people,” stated CEO Ted Decker, who took the reins of Home Depot in March. “We believe this investment will position us favorably in the market, enabling us to attract and retain the level of talent needed to sustain the customer experience we strive to deliver.”
The retailer is also creating new management positions on the stores’ floors. The positions will create "an improved customer and associate experience while also creating new career paths for our associates," Decker told investors on the chain's earnings call.
Home Depot reported net earnings of $3.36 billion, or $3.30 per share, for the quarter ended Jan. 29, compared with net earnings of $3.35 billion, or $3.21 per share, in the year-ago period. Analysts had expected earnings of $3.28 per share.
Sales inched up 0.3% to $35.83 billion, missing estimates of $35.97 billion. Home Depot attributed the miss to a decrease in lumber prices, which are significantly down from a year ago.
Comparable sales decreased 0.3%, in building materials, plumbing, hardware, tools, outdoor and paint.
The average ticket rose 5.8%, to $90.05, with the increase largely fueled by inflation. Total customer transactions dropped 6%.
For the full year, Home Depot has sales of $6.2 billion, up 4.1% from the year-ago period. Comparable sales increased 3.1% and comparable sales in the U.S. increased 2.9%.
Net earnings for fiscal 2022 were $17.1 billion, or $16.69 per share, compared with net earnings of $16.4 billion, or $15.53 per share in fiscal 2021.
“Fiscal 2022 was another record year for The Home Depot as our team continued to successfully execute in a challenging and dynamic environment," said Decker. "Our ability to deliver growth on top of the $40 billion of sales growth achieved over the prior two-year period, while navigating persistent inflation, ongoing global supply chain disruptions, and a tight labor market, is a testament to investments we have made in the business, as well as our associates' relentless focus on our customers.”
Home Depot also announced that its board approved a 10% increase in its quarterly dividend to $2.09 per share, which equates to an annual dividend of $8.36 per share. This is the 144th consecutive quarter that the company has paid a cash dividend.
The dividend is payable on March 23, 2023.
For fiscal 2023, Home Depot expects sales to be flat versus fiscal 2022 and earnings per share to fall in the “mid-single digits” percentage range.
The company held $2.8 billion in cash and equivalents at the end of the fourth quarter. It operated a total of 2,322 retail stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.