All the right tools for sustained growth
The Home Depot is leveraging a booming housing market and a stronger economy into impressive sales growth.
More shoppers visited the retailer in the fourth quarter ended Jan. 29 and, on average, they also spent more in an improving housing market.
The retailer said sales were $23.9 billion for the fourth quarter of fiscal 2017, a 7.5% increase from the fourth quarter of fiscal 2016. Overall same store sales were 7.5%, and comp sales for U.S. stores were positive 7.2%.
"Our ongoing commitment to enhance the interconnected retail experience for our customers, provide localized and innovative product, and deliver best in class productivity resulted in record sales and net earnings for 2017," said Craig Menear, chairman, CEO and president.
Among the omnichannel initiatives the company is focused on: enhanced online chat, improved mobile ordering, a new e-commerce platform, and faster checkout.
“The U.S. economy is strong and tax reform is net positive for the housing industry,” Chief Financial Officer Carol Tome said on an earnings call. “We expect higher job growth, higher income growth, and higher mortgage rates. But with that comes higher home price appreciation and rising housing demand, which should drive home improvement spending. Eighty percent of U.S. households have more money due to tax reform and the increase to the standard reduction."
Tome also said the retailer believes interest rates would have to advance to 7% to adversely affect growth.
Net earnings for the fourth quarter were $1.8 billion, or $1.52 per diluted share, compared with net earnings of $1.7 billion, or $1.44 per diluted share, in the same period of fiscal 2016. Diluted earnings per share increased 5.6% from the same period in the prior year.
Sales for fiscal 2017 were $100.9 billion, an increase of 6.7% from fiscal 2016. Total company comparable store sales for fiscal 2017 increased 6.8%, and comp sales for U.S. stores were 6.9% for the year.
The company expects comparable store sales growth of 5% in the current fiscal year, while analysts were expecting a 5.4% increase.
At the end of the fourth quarter, the company operated a total of 2,284 retail stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.