Mild winter and revamp investments boost Home Depot

Kimberly Adams Feb 25, 2020
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Home Depot reported better than expected sales and profits, partly due to a mild winter. Scott Olson/Getty Images

Mild winter and revamp investments boost Home Depot

Kimberly Adams Feb 25, 2020
Home Depot reported better than expected sales and profits, partly due to a mild winter. Scott Olson/Getty Images
HTML EMBED:
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Home Depot today announced better than expected sales and profits in the fourth quarter — same store sales were up 5.3% in 2019.

The company’s “One Home Depot” program — to better integrate its brick-and-mortar and online business — has strengthened sales, and the company’s performance was buoyed by a mild winter that facilitated construction.

It’s a tough world out there for brick-and-mortar retailers. Home Depot has spent the last couple of years revamping stores, trying to streamline pick-ups for professional contractors and improving its business online. 

‘You look at their online sales that grew 21% year, over year, which is really great growth and is helping to drive some of that total same-store sales growth,” said Liz Suzuki, a retail analyst at Bank of America.

She said things like in-store pickup help convert those online shoppers to in-store foot traffic.

“Now, it’s 9% to 10% of their business, which for a category that is not traditionally known for having a big online demand, that’s really pretty strong,” she said.

While the One Home Depot investments are paying off in some areas, Ken Leon, director of equity research at analytics firm CFRA, said the surprise was that “the demand was stronger from both the consumer and the pro, or the contractor, segment.”

Leon said a mild winter helped. And there are some general economic trends that are showing up in Home Depot’s numbers.

“They’re really getting the benefit where the consumer has higher household income, if you’re looking to do a big project such as a kitchen, or home equity loan rates are low, too,” Leon said.

Those same trends are likely to help Home Depot competitor Lowe’s, which reports its results tomorrow.

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