Strong Home Depot Results Show Pandemic's Consumer Spending Shift
August 18 2020 - 7:44AM
Dow Jones News
By Matt Grossman
Home Depot Inc. on Tuesday posted strong sales growth and a
higher-than-expected profit in the latest fiscal quarter,
emphasizing the company's success drawing home-improvement shoppers
during the Covid-19 pandemic.
Revenue for the Atlanta-based retailer rose by 23.4% to $38.05
billion in the May-to-July period, up from $30.84 billion during
the same three months of 2019. Analysts surveyed by FactSet had
anticipated revenue of $34.53 billion.
Home Depot's comparable-store sales in the U.S. -- which compare
sales at stores opened more than a year -- grew by 25% year over
year. The company notched double-digit percentage increases in the
number of customer transactions, the average ticket size and sales
per square foot of retail space.
In the quarter, Home Depot spent $480 million on additional
employee benefits during the coronavirus pandemic, including
bonuses for hourly workers in stores and distribution centers.
Since the pandemic began, the company has spent $1.3 billion on
enhanced pay and benefits, Home Depot said.
Home Depot's earnings in the quarter were $4.33 billion, or
$4.02 a share, up from $3.48 billion, or $3.17 a share, in 2019's
second quarter. Analysts anticipated earnings per share of
$3.64.
As Americans spent more time at home during the public-health
crisis, many turned their attention to home-improvement 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.
Retailers such as Home Depot also benefited from federal
stimulus checks to consumers and federally enhanced unemployment
benefits. July marked the third straight month that U.S.
households' retail spending increased, according to Commerce
Department data. A more recent analysis by research firm GobalData
suggests consumer spending may have moderated after the enhanced
$600 weekly unemployment benefit expired at the end of July.
Write to Matt Grossman at matt.grossman@wsj.com
(END) Dow Jones Newswires
August 18, 2020 07:29 ET (11:29 GMT)
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