Home Depot Q3 earnings fall amid increased investments

The Home Depot’s investments in stores, supply chain and the integration of online and in-store shopping took a toll on its earnings in the third quarter even as its sales continued to rise. 

Earnings fell to $2.76 billion, or $2.53 per share, in the quarter ended Nov 3 from $2.86 billion, or $2.51 per share, a year earlier. Analysts had expected $2.52 per share.

Sales rose 3.5% to $27.22 billion, just shy of Street estimates.  Home Depot’s average customer ticket was $66.36, higher than in the year-ago period. Sales per square foot also rose to $449.17 from the year-earlier period. 

Same-store U.S. sales rose 3.8%, less than expected.

The retailer’s strategic investments – or “One Home Depot” – have been described as a drive to “a frictionless, interconnected customer experience” and an $11 billion multi-year project. The investments are largely on track and have generated positive results, said CEO Craig Menear. But some of the benefits are taking longer to realize, he said.

“While sales reflected broad-based growth across the business, the results fell short of the company’s expectations,” said Menear. 

He added: “We are encouraged by the momentum in our business as we invest to extend our competitive advantages.”

Looking ahead, the company’s full-year comp-store sales growth is now expected to come in at positive 3.5%, down from previous guidance of 4.0%. Full-year sales are expected to grow 1.8%, that’s lower than previous guidance of 2.3%.

At the end of the quarter, Home Depot operated a total of 2,290 retail stores throughout North America.