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

THE HOME DEPOT, INC.

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Home Depot : Retailers Seize on Pandemic Fallout to Become Property Owners

12/01/2020 | 08:15am EST

By Esther Fung

Struggling shopping malls are finding an unexpected boost from bargain-hunting retail operators.

Such was the case in Stamford, Conn., where the Stamford Town Center mall lost popular tenants like H&M, Apple Inc. and Talbots to a competing shopping center that opened last year only 8 miles away.

In October, home-furnishing company Safavieh purchased Town Center mall.

Safavieh plans to open a home-design center and relocate its nearby home furnishings store to the mall, said Arash Yaraghi, whose family runs the Port Washington, N.Y.-based company.

But, he added, "price is always the deciding factor." Safavieh paid $20 million for a property that was appraised at $64 million last year, according to a Stamford government website.

The coronavirus pandemic and its debilitating effect on shopping centers are providing growing retail operators with an opportunity to achieve something many have hoped to do for a while -- become owners.

"We have seen retailers zeroing in on buying opportunities," said Ariel Schuster, vice chairman at real-estate firm Newmark. "Historically, the most active buyers have been in the luxury sector."

In a recent example, Swiss high-end clothing retailer Akris purchased three buildings on New York City's Madison Ave. for $45 million -- a decade-low price for the ritzy neighborhood on a per square foot basis -- including the building that accommodates its Manhattan store.

Other retailers are taking advantage of the times to upgrade their rental space. Home Depot Inc. is planning to relocate its basement store in Manhattan's Upper East Side a few blocks away to a four-story store currently occupied by Bed Bath & Beyond Inc. The home-furnishings retailer, which has struggled with falling sales for years, is not renewing its lease as it works to close 63 stores by the end of its current fiscal year.

"We chose this location because it'll be convenient for residents on the Upper East Side and offered the space we need just as our existing lease expired," said Margaret Smith, a spokeswoman from Home Depot.

The landlord, Gazit Horizons Inc., said it was able to finalize a 20-year lease amid Covid-19 by offering Home Depot high ceilings and an ample loading area.

Gazit also plans to invest $15 million to $18 million to retrofit the space, according to filings by its Israeli-based parent with the Tel Aviv Stock Exchange. Home Depot's total gross rent will be $9.5 million, up from the $5.8 million that Bed Bath & Beyond is paying, the filing added.

Tenants looking for new real estate have consisted primarily of big sellers of groceries, furniture, discount goods and pet supplies that have benefited from people staying at home, brokers say.

But some specialty retailers have seized on opportunities, too. Sever Garcia, who relocated his accessories and travel items store from downtown Brooklyn to Manhattan's upscale Tribeca neighborhood, said his new landlord offered three months free rent and other incentives. This has helped him remain open, with foot traffic remaining weak as office workers and tourists haven't returned to the city.

These days, he is getting unsolicited offers from property owners in SoHo and Long Island with generous terms such as six months of rent based on a percentage of sales. But rather than tempt fate again during the pandemic, he is staying put for now. "It's not the best time to test new businesses," Mr. Garcia said.

Write to Esther Fung at esther.fung@wsj.com

(END) Dow Jones Newswires

12-01-20 0814ET

Stocks mentioned in the article
ChangeLast1st jan.
BED BATH & BEYOND INC. 12.43% 30.21 Delayed Quote.70.10%
THE HOME DEPOT, INC. 1.77% 284 Delayed Quote.6.92%
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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.
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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%
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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
LOWE'S COMPANIES, INC.7.41%126 321
KINGFISHER PLC0.96%7 844
HOME PRODUCT CENTER2.19%6 138
SIAM GLOBAL HOUSE PUBLIC COMPANY LIMITED14.71%2 862
BHG GROUP AB-6.82%2 184