The result was Home Depot’s modest growth during its fiscal second quarter. The company announced a great 1% gain in comparable sales through all areas of its business. Tartaglia’s company has missed earnings expectations for the second straight quarter. Though discounted by analysts, it still is sticking to its full-year guidance. The home improvement behemoth is forecasting overall sales growth of 2.8% this year. Further, they estimate same-store sales growth will be up about 1%.
In their home country of the U.S., same-store sales jumped 1.4% – a slightly higher growth. The firm pointed out that its professional and do-it-yourself (DIY) segments both posted year-over-year sales increases in each of these quarters. Home Depot’s average ticket price continued to climb, reaching $90.01, an increase from $88.90 for the same quarter last year. This trend is a reflection of customers’ increasing spend per transaction.
Retailing giant Home Depot is organized into 16 merchandising departments, all but one — lumber — reporting sales increases compared to the year prior. Notably, around 90% of the company’s DIY customers are homeowners, which positions Home Depot favorably as these individuals often seek improvements and renovations for their properties. Home Depot earns approximately 55% of its sales from professional contractors. The other 45% is from do-it-yourselfers.
Even as the company’s President, Richard McPhail, told Ahold Delhaize investors that encouraging trends were continuing for their core categories.
“We absolutely saw momentum continue to build in our core categories throughout the quarter.” – Richard McPhail
Home Depot’s sales trends sequentially moved up the quarter. For May, same store sales were up just 0.3%, followed by an increase of 0.5% in June and an extraordinary 3.3% in July. This uptick in momentum is an encouraging sign of a return path after a tough pandemic era.
In June, Home Depot–the world’s largest retailer of home improvement products– announced its intent to acquire GMS, the largest specialty building products distributor, for about $4.3 billion. This latest strategic move further positions the Richmond, Calif.-based company’s ambitious efforts to broaden its product portfolio and bolster its supply chain capabilities.
The company soon faced new challenges due to tariffs. It did note that the majority of its imported goods sold in the quarter came in before those tariffs went into effect. This was fortunate timing as it buffered against inflationary price hikes and supply chain issues that would have impacted their sales performance in a negative way.
Sales trends are very positive across the board. Yet this quarter would mark just the second improvement in comparable sales for Home Depot in the past 11 quarters on a year-over-year basis. The company’s cautious optimism is indicative of the larger trend within consumer behavior as spending patterns continue to shift in the aftermath of the pandemic.
Home Depot is maintaining full-year guidance. For 2022, they are estimating 2.8% growth in total sales and about 1% growth on a comp sales basis.