In the first quarter, Home Depot beat Wall Street estimates on earnings but came up a bit short on revenues as it continues reconfiguring elements of the operation to align with business trends and market opportunities.
Net earnings were $3.6 billion, or $3.63 per diluted share, versus $3.87 billion, or $3.82 per diluted share, in the year-earlier quarter.
An analyst consensus estimate published by Yahoo Finance called for earnings of $3.60 per diluted share and revenues of $36.66 billion.
Comparable sales for the period decreased 2.8% year over year, the company reported, and comps in the United States decreased 3.2%.
Net sales were $36.42 billion versus $37.26 billion in the year-before quarter. Operating income was $5.08 billion versus $5.55 billion in the year-previous period.
In a conference call, Ted Decker, Home Depot chair, president and CEO, said the company is still intent on driving business with professionals and is establishing specific programs to address opportunities with that class of customer, initiatives that are gaining traction. He noted that, although the store remains the center of the business, Home Depot is developing more fulfillment options, a dedicated sales force, specific digital assets, trade credit and order management capabilities geared at the residential pro who shops across categories.
Billy Bastek, Home Depot executive vice president, merchandising, pointed out that the company has recently made department changes to more closely reflect how customers shop product categories and better align with growth initiatives. Home Depot now has 16 departments, up from 14 previously, and has separated electrical and lighting as well as kitchen and bath. The company has renamed the Tools department, which is now called Power and includes outdoor power equipment in an effort to capture synergies and maximize the strength of battery-powered platforms.
In terms of department comp performance for the quarter, Bastek said Home Depot’s building materials and power departments posted positive comps, while outdoor, garden, paint, lumber, plumbing and hardware performed above the company average. First quarter comp transactions decreased 1.5% and comp average ticket decreased 1.3%. However, he said, customers continue trading up for new and innovative products.
Big ticket count transactions, those over $1,000, slipped 6.5% compared to the quarter a year past due primarily to less engagement with larger discretionary projects that customers typically use financing to fund, such as kitchen and bath remodels.
Decker said in announcing the financial results, “The team executed at a high level in the quarter, and we continued to grow market share. And while the quarter was impacted by a delayed start to spring and continued softness in certain larger discretionary projects, we feel great about our store readiness, our product assortment in stores and online, and our associate engagement. Our associates are energized and ready to serve our customers as spring breaks across the country.”
