$1000 Invested In Home Depot 15 Years Ago Would Be Worth This Much Today Home Depot NYSE:HD

home depot earnings call

So we plan — in other words, think of inflation as neutral from the point in time that we established the guidance. As we build that frictionless ecosystem, we think that in and of itself is disruptive because our aim is to build the next level of frictionless experience. And then perhaps more disruptive is our pursuit of the Pro planned purchase. As we’ve said, all Pros are in our buildings. We always use the term that Pros use us as a 7-Eleven.

home depot earnings call

Not to mention, we’re gaining a tremendous amount of learning that we’re taking back to all stores in terms of addressing every eight-foot bay, for lack of a better term, and we’re improving space productivity. And then alongside that, we do manage a very long-standing product line review process, where we continue to look at hundreds of programs every year, again, to drive more productivity inside of our stores. And then bigger picture, I was wondering if you guys just dig a little bit deeper in terms of the space optimization and SKU productivity efforts. Just maybe just a little bit more color on where in the store you think you can gain improvement off that $600 in sales per square foot. Everything we hear from our Pro customers is they’ve got more work than they can handle. I know for myself, it took a while to get somebody out to just do simple projects around my house.

We’ve got strength in our ticket above $1,000 and that speaks to the project and to the Pro customer. We all say in categories like grills, mowers, laundry, and a few other bigger ticket items, it’s possible there is a price sensitivity. So it hasn’t as of yet, and this is what we’re seeing. I mean, we talk about home price appreciation transactions, household formation, etc., multiple inputs on housing. But the strongest and most correlated for our sales is home price appreciation. Now that’s gone up, as Richard said, 30, 40% in the last couple of years, which we believe translates to, high $8 trillion, $9 trillion of increased wealth with what is our core customer base.

The Home Depot, Inc. (HD) CEO Ted Decker on Q2 2022 Results – Earnings Call Transcript

Transactions fell -2.0% in the quarter, while average ticket edged up 0.1%. Everything investors know so far points to a challenging period ahead for the retailer at least through the end of 2023. Management in mid-August affirmed their outlook calling for sales to decline by between 2% and 5% this year, roughly erasing 2022’s 4% increase. The chain is seeing the same pressures affecting peers across the retailing industry, from Target to Best Buy, as spending shifts away from discretionary purchases and more toward essentials. As they engage with more capabilities, we’re seeing larger purchases.

  • We expect our fiscal 2022 operating margin to be approximately 15.4% for the year.
  • The Home Depot will conduct a conference call today at 9 a.m.
  • Comps in the US were positive 5.4% for the quarter, with positive comps of 4.1% in May, 4.7% in June and 7.2% in July.
  • As we head into the Black Friday timeframe, we’ll be there for our customers with great value and that will continue being the advocate for value for our customers.
  • Well, the investment in wage, again, which has really proven to have driven a lot of benefit on the customer experience side, that’s embedded in our guidance.

During the second quarter, our total company comps were positive 5.8% with positive comps of 5.2% in May, 4.9% in June and 7.1% in July. Comps in the US were positive 5.4% for the quarter, with positive comps of 4.1% in May, 4.7% in June and 7.2% in July. Home Depot said Tuesday that while its customer transactions were down slightly more than 4%, its average ticket prices rose about 9% to $89.67.

I mean we talk about home price appreciation, transactions, household formation, et cetera, multiple inputs on housing but the strongest and most correlated for our sales is home price appreciation. Now that’s gone up, as Richard said, 30%, 40% in the last couple of years, which we believe, translates to high $8 trillion, $9 trillion of increased wealth with what is our core customer base. In DIY, we did see some seasonal weakness. But as we parse through that, it’s difficult to say is that weakness in the seasonal businesses the overlap of the two prior incredibly strong years? Is it the weather where we had a really bad and late spring and then it turned incredibly hot across the country or are they fundamental demand pressures?

The Home Depot Announces First Quarter Results; Raises Fiscal 2022 Guidance

Our next question comes from the line of Mike Baker with D.A. And I’ll just jump in on Pro Xtra as well. I’m just thrilled with the second year in terms of performance.

I’d like to — I’ll just say that, we couldn’t be happier with the HD Supply acquisition. And we really like what we’re seeing out of that ecosystem in the Dallas market that Hector mentioned. We’re learning a great deal and we’re winning that Pro plan purchase. And so we’re excited about the possibilities that remain with our investment and our One Supply Chain strategy. We’re very pleased with the performance of the buildings.

The negative 5 case simply takes that PCE share shift assumption, our share of PCE and assumes that we revert back to 2019 levels of PCE share by the end of the fiscal year. The vast majority of lumber pressure year-over-year exists in that first half. So as that normalizes in the negative 2 case, second half improves versus the first half. In the lower end of our range, we would expect the first half would outperform the second half, again, due to that assumption of continued acceleration in our share of PCE. Were positive, 5.4% for the quarter with positive comps of 4.1% in May, 4.7% in June, and 7.2% in July. In the second quarter, our gross margin was approximately 33.1%, a decrease of approximately 15 basis points from last year, primarily driven by supply chain investments.

These products bring excitement to our stores and help drive traffic. And our sneak preview of our Halloween lineup was a tremendous success. Thank you, Christine, and good morning, everyone. Welcome to Home Depot’s second quarter 2022 earnings call. Joining us on our call today are Ted Decker, CEO and President; Jeff Kinnaird, executive vice president of merchandising; and Richard McPhail, executive vice president and chief financial officer.

Home Depot posts better-than-expected quarter despite inflation

Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. Now I often say, Liz, that we talk here about running the business and changing the business with our new capabilities. And the supply chain team had to run the business during a pandemic and change the business. It has been operating for just over two years, and we really like what we’re seeing out of this facility. But what we’ve learned is that it takes time to assort, optimize and really commercialize these buildings. So we’re very pleased with the progress that we made regarding our One Supply Chain strategy but still have more work to do.

home depot earnings call

That’s a formula that’s worked for us, and we think it’s going to keep working for us. During the second quarter, both Pro and DIY sales growth was positive, with Pro outpacing DIY. We’re encouraged by the continued momentum https://1investing.in/ we are seeing with our Pros and they tell us their backlogs remain healthy. During the quarter, we saw a robust project demand across the business. As Jeff will detail, the business was strong across our departments.

Earnings News

I think we have to return to Ted’s commentary that the consumer — our customer, consumer and Pro, has been more resilient than we even expected in the beginning of the year. When we expect — when we issued guidance at the very beginning of the year, we assumed that we’d see ticket growth driven by inflation and really sort of like-for-like offset in transactions. And so that led to our our increased guidance in Q1 of a 3% comp.

  • At this point, we saw their spend with The Home Depot grow to more than $100,000 annually but still for mostly unplanned immediate need purchases in store.
  • The growth in our comp average ticket was driven primarily by inflation across several product categories.
  • And those facilities will serve, both the parcel and the big and bulky customer in local markets.
  • And yes, now month-over-month, the values are off slightly, but I am still up 40% or 38% from where I was at the end of 2019.

We’re ready for spring with everything from shrubs to a variety of flowers, herbs, vegetables for every type of gardener. Our supply chain is an important component of the ecosystem that we’re building to serve our customers and drive productivity. And our intent is really to build the fastest, most efficient and reliable delivery network in home improvement reaching 90% of households with a same-day, next-day service on parcel and big and bulky.

In addition, we feel confident that the investments we have made in wage are driving the intended results. As Ann will discuss, in the short timeframe since our most recent wage enhancements took effect, we are attracting a greater number of qualified applicants and attrition is down. Lastly and as you would expect, we will continue to focus on driving productivity and efficiency across the business. These risks and uncertainties include, but are not limited to the factors identified in the release and in our filings with the Securities and Exchange Commission. Today’s presentations will also include certain non-GAAP measures. Reconciliation of these measures is provided on our website.

Interest and other expense for the second quarter increased by $58 million to $379 million due primarily to higher long-term debt levels than one year ago. In the second quarter, our effective tax rate was 24.3%, up from 23.9% in the second quarter of fiscal 2021. Electrical decor and storage, kitchen and bath, outdoor garden, tools, appliances, indoor garden, lumber and flooring were positive, but below the company average. As you heard from Ted, while our seasonal businesses posted positive comps in the second quarter, they underperformed our expectations for the first half.

But starting with last year, we established a sort of a guideline where we expect appropriate capital expenditures to be around 2% of sales. We intend to invest on a much more consistent basis but also a much usance lc meaning more agile basis. I mean appliances was a business — and we’ve been in it for some time, but it was a business initially we didn’t want to be in because of what we thought was the low-margin profile.

That’s why we’ve created plenty of financial flexibility in our model. In a scenario where sales are decreasing, we have variable expense that decreases with sales. We have a degree of fixed expense that can be reduced. And then when I look at ’21, on a $900 billion TAM, you’re kind of still at 16%. So I guess the first question is, why would your share not have increased?

Marc Cuniberti commentary: Inflation is here to stay – Gold Country Media

Marc Cuniberti commentary: Inflation is here to stay.

Posted: Wed, 13 Sep 2023 10:00:00 GMT [source]

Our next question comes from the line of Michael Baker with D.A. But the growth over the past two years has been impressive. The macro backdrop for continued growth is also really encouraging.

I mean, Ted, in 28, the outdoor garden category, it goes across the business in terms of market share opportunities to name a few. There’s certainly transaction pressure as a result of levels of inventory in certain categories. One of the pressured areas in the business over the last year and a half, if you will, has been in electrical. I mean we literally have seen the volume go up significantly. As you sit here, it’s up a little more than 50% over 2019 levels, sales up a little less than 40%. Just how are you thinking about that gap and what the right level of inventory is as we move through ’22?

Stock Advisor list price is $199 per year. And Christine, we have time for one more question. Our next question comes from the line of Liz Suzuki with Bank of America. Previously, our view of that market was $55 billion. As we understand that market is just a bigger market, we have a smaller share than we thought. And what I love about the $900 billion-plus number is there’s a tremendous amount of room to grow for us.


Benzinga does not provide investment advice. This article was generated by Benzinga’s automated content engine and reviewed by an editor. According to 25 analyst offering 12-month price targets in the last 3 months, Home Depot has an average price target of $340.8 with a high of $384.00 and a low of $290.00.

I wouldn’t say over the years, certainly, right now, we are seeing two of the biggest factors on each of ticket and transaction is, as we said. We have specific discretionary items, best examples are things like a grill, a patio set, an appliance, those tend to be one-off discretionary items, and we are seeing pressure on those. We’ve been seeing pressure in those for some time. What was newer in our observations this quarter is that while projects are still strong and Pro project backlog is still elevated the size of the projects are getting a bit smaller. And it could be that the project is being deferred or it could be that the project is being broken up into chunks.

But we said just as importantly, we’re going to deliver best-in-class operating profit dollar growth and ROIC. We’re going to watch operating margin, but dollar growth and returns are our focus. Craig and Ted, congratulations on the transition. My first question is — the first question is on the outlook for sales. We began offering personalized pricing on certain products.

Lastly, in terms of our flatbed distribution centers, we expect to end the year with approximately 15 or about half of our intended goal. The FDC in Dallas was the first we stood up. We have seen some improvement, but we believe the constraints on the industry supply chain are likely to persist in the near term. Specifically, we’ve seen a little bit of easing of pressure at our ports, but we’ve planned for this and have been proactive in landing product earlier than usual to make sure that we’re ready for the business.