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MarketScreener Homepage  >  Equities  >  Nyse  >  The Home Depot, Inc.    HD

THE HOME DEPOT, INC.

(HD)
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Home Depot Plans Workforce Investment as Pandemic Brings Another Strong Quarter -- 2nd Update

11/17/2020 | 12:07pm EST

By Matt Grossman

Home Depot Inc. reported strong sales growth in its latest quarter as the retailer continues to thrive from people spending more time on home-improvement projects during the coronavirus pandemic.

The company also said it would permanently raise compensation for front-line workers in a program that will cost approximately $1 billion a year.

In the fiscal third quarter, the company's revenue rose to $33.54 billion, up 23% from a year earlier, a similar pace to the second quarter. Analysts surveyed by FactSet were expecting revenue of $31.83 billion. Same-store sales grew 24% year-over-year overall, and by 25% in the U.S.

As Americans have spent more time at home during the public-health crisis, many turned their attention to domestic projects, shifting money they would have otherwise spent on vacations, gym memberships and other activities that have been postponed to prevent the virus's spread.

"Home improvement is a great space to be in at the moment," Richard McPhail, the company's finance chief, told analysts on a conference call.

During the Covid-19 pandemic, Home Depot has offered some temporary benefits to workers, including more paid time off and a temporary weekly bonus program, leading to costs of about $355 million in the latest quarter. The company on Tuesday said it plans to make some of those enhancements permanent for its hourly associates.

"We continue to lean into these investments because we believe they are critical in enabling market-share growth in any economic environment," Chief Executive Craig Menear said.

Sales growth was fairly consistent throughout the quarter, with comparable sales in the U.S. rising 25% in August, 26% in September and 23% in October after adjusting for where Labor Day fell on the calendar. Growth accelerated further during the first weeks of November, Home Depot said, as the company shifted to an earlier start for holiday sales events compared with last year.

Coronavirus cases are surging across the U.S. this month, but Mr. Menear said the pandemic didn't appear to dent the company's results more in areas where the spread is more rampant.

"We see no correlation in the business as it relates to Covid cases," he said.

Home Depot's gross margin in the third quarter was 34.2%, down about 0.3 percentage point year over year. Executives attributed the trend in part to a larger sales-mix share for lumber, which has become more expensive amid higher demand this year.

Home Depot shares were down 3.1% at $271.01 on Tuesday morning. The stock is up roughly 24% since the start of the calendar year.

The company's performance in the quarter, which ended Nov. 1, bookends a robust summer season for the Atlanta-based retailer. In the first nine months of the fiscal year, revenue grew by more than 18% overall.

The number of customer transactions for Home Depot in the third quarter rose by 13% year-over-year to more than 453 million, with an average ticket size of $72.98. Sales per retail square foot increased by more than $100 to $552.85.

Home Depot's quarterly net profit was $3.43 billion, or $3.18 a share, compared with a profit of $2.77 billion, or $2.53 a share, in last year's third quarter. Analysts had forecast a profit of $3.13 a share.

On Monday, Home Depot agreed to buy HD Supply Holdings Inc., a wholesale distributor of building supplies, for roughly $8.7 billion. HD Supply was a unit of Home Depot until 2007, when Home Depot sold HD Supply to a group that included Bain Capital, Carlyle Group and Clayton Dubilier Rice.

The deal aligns with Home Depot's goals to reach a larger share of the maintenance, repair and operations business, Mr. Menear said.

Write to Matt Grossman at matt.grossman@wsj.com

(END) Dow Jones Newswires

11-17-20 1206ET

Stocks mentioned in the article
ChangeLast1st jan.
HD SUPPLY HOLDINGS, INC. 0.21% 55.99 End-of-day quote.0.00%
THE CARLYLE GROUP INC. -2.05% 33.4 Delayed Quote.6.23%
THE HOME DEPOT, INC. 1.77% 284 Delayed Quote.6.92%
ZR (ZR) - CBE (ELECTRONIC)/C1 0.26% 13.28 End-of-day quote.6.81%
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Financials (USD)
Sales 2021 130 B - -
Net income 2021 12 753 M - -
Net Debt 2021 27 357 M - -
P/E ratio 2021 24,0x
Yield 2021 2,12%
Capitalization 306 B 306 B -
EV / Sales 2021 2,56x
EV / Sales 2022 2,56x
Nbr of Employees 415 700
Free-Float 60,1%
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Technical analysis trends THE HOME DEPOT, INC.
Short TermMid-TermLong Term
TrendsBullishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 33
Average target price 306,54 $
Last Close Price 284,00 $
Spread / Highest target 25,0%
Spread / Average Target 7,94%
Spread / Lowest Target -26,1%
EPS Revisions
Managers and Directors
NameTitle
Craig A. Menear Chairman & Chief Executive Officer
Edward P. Decker President & Chief Operating Officer
Richard V. McPhail Chief Financial Officer & Executive Vice President
Matthew A. Carey Chief Information Officer & Executive VP
Paul Antony Senior Vice President-Technology
Sector and Competitors
1st jan.Capitalization (M$)
THE HOME DEPOT, INC.6.92%305 755