Home Deport Reports Pandemic Gains for Q2
Food retailers aren’t the only merchants benefiting from the pandemic. The latest financial results from The Home Depot indicate that consumers stuck inside are using that time to fix things around their homes.
The chain on Tuesday reported a 23.4% year-over-year revenue increase, to $38.1 billion. Comparable stores sales in the U.S. increased 25%. Sales that leveraged Home Depot's digital platforms increased about 100% in the quarter, and more than 60% of the time the chain's customers opted to pick up their orders at a store.
"During the quarter, we saw customers take on projects throughout their homes," Craig Menear, Home Depot chairman, CEO and president, said during the post-earnings conference call. "From deck building to painting projects, landscape work and home repairs due to increase wear and tear. Clearly our customers engaged with home improvement in a meaningful way."
But as retailers have learned during the pandemic, making predictions for the rest of the year — and even into 2021 — is even harder than it would be in relatively normal times.
"We’re cautious to extrapolate trends from the first half of the year into a forecast for the remaining of the year, particularly given the tremendous amount of uncertainty we face with regards to the duration and continued impacts of the virus," Menear said.
That said, he offered analysts and investors reason for optimism.
"So while we can’t predict the sales trajectory for the back half of the year, we do know that for many of our customers, the home has never been more important," he said. "Our recent customer survey work tells us that customers have a continued willingness to take on both indoor and outdoor projects in the near-term."
Net earnings for the second quarter of fiscal 2020 were $4.3 billion, or $4.02 per diluted share, compared with net earnings of $3.5 billion, or $3.17 per diluted share, in the same period of fiscal 2019. For the second quarter of fiscal 2020, diluted earnings per share increased 26.8 percent from the same period in the prior year.
In the second quarter, the retailer invested approximately $480 million in additional benefits for associates, including weekly bonuses for hourly associates in stores and distribution centers. Year-to-date, the Company has spent approximately $1.3 billion on enhanced pay and benefits in response to COVID-19. Additionally, the retailer’s first half performance resulted in a record payout for Success Sharing, the Company’s profit-sharing program for hourly associates.
“The investments we have made across the business have significantly increased our agility, allowing us to respond quickly to changes while continuing to promote a safe operating environment. This enhanced our team’s ability to work cross-functionally to better serve our customers and deliver record-breaking sales in the quarter,” Menear, said. “We remain focused on continuing the momentum of our One Home Depot investment strategy that we believe will position us for continued growth over the long-term, while at the same time maintaining flexibility to navigate the demands of the current environment. Through it all, we will continue to lead with our values by doing the right thing and taking care of our people.”
During Tuesday's post-earnings conference call, Menear talked about meeting the pandemic challenges during the recently completed quarter. "We expanded our operating hours from 6 p.m. to 8 p.m.," he said. "This action was taken to relieve the end of day bottlenecks we observed in some stores, while we were operating under more restrictive hours."
Even as Home Depot enjoys digital gains — and continues with its $1.2 billion distribution center expansion push — Menear acknowledged the challenges that come with e-commerce opportunities.
"The step change in demand across our digital platforms is not without its challenges, particularly from a delivery and fulfillment standpoint," he said. "We’ve been able to leverage investments we have made in the scale and flexibility of our supply chain network to relieve some of the pressure."