Home Depot Reports Higher Revenue Despite Coronavirus Impact -- 2nd Update
May 19 2020 - 2:16PM
Dow Jones News
By Matt Grossman
Home Depot Inc. reported higher sales in the latest quarter
despite the large-scale disruption caused by the coronavirus
pandemic, but the company's expenses rose sharply as it boosted
workers' pay and benefits.
Revenue in the fiscal first quarter was $28.26 billion, compared
with $26.38 billion a year earlier. Analysts expected $27.56
billion, according to FactSet.
Comparable sales rose 6.4% overall, and 7.5% in the U.S. during
the period, which stretched from February to May. The rise
partially reflected more interest in do-it-yourself projects, the
company said, as people faced stay-at-home orders during the
pandemic.
"Clearly, the customer is reengaged with DIY," Chief Executive
Craig Menear said on a call with analysts.
Customers spent an average of $74.70 per transaction during the
quarter, up 11% from a year earlier, while the number of
transactions fell 3.9% to 374.8 million. The pattern reflected
people's desire to limit trips to the store, Mr. Menear said.
Sales from Home Depot's digital platforms grew by about 80% in
the quarter as people favored online shopping over in-person
browsing during the pandemic, according to Chief Financial Officer
Richard McPhail, who said the online sales bore out the company's
past technology investments.
"Demand for buy online, pick up in store really took off," Mr.
McPhail said.
Home Depot is among a small group of retailers, positioned to do
well during the pandemic because its stores have remained open and
consumers stocked up on household goods. Also Tuesday, Walmart
reported global revenue rose 8.6% to $134.62 billion in the latest
quarter.
Despite positive sales trends in the first quarter and the first
two weeks of the current quarter, Home Depot withdrew its guidance
for the year, citing the uncertainty of the pandemic.
Earnings per share of $2.08 were below the $2.30 analysts polled
by FactSet were expecting. The company said that its results
included $640 million, or 60 cents a share, of after-tax added
expense related to steps the company took to support its
employees.
The added costs were largely from paid-leave expenses that won't
recur in the future, according to Mr. McPhail.
"We have seen the full impact occur all in the first quarter,"
Mr. McPhail said. He added that other enhanced compensation, such
as higher overtime pay, has continued into the second quarter.
Overall, expenses totaled $6.4 billion, up 17% from a year
earlier.
Shares of Home Depot fell 2.4% to $239.58 at midday.
Against the backdrop of a declining stock market, Home Depot
stock has still outperformed this year. The company's shares have
risen about 10% since the start of the year, a period when the
S&P 500 index has declined overall.
Write to Matt Grossman at matt.grossman@wsj.com
(END) Dow Jones Newswires
May 19, 2020 14:01 ET (18:01 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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