Highlights from Depot’s Record Quarter
The world's largest home improvement retailer set records for sales and earnings in the second quarter of 2017. Sales were up 6.2% to $28.1 billion.
Here are some of the highlights from the company’s earnings recap to analysts.
Home Depot’s dot-com business represented 6.4% of sales, and grew about 23% in the quarter, compared to the same quarter last year. “ Our digital team continues to invest in content, site improvements, and better mobile experiences to take the friction out of the interconnected experience online; while our operations team remains focused on improving the interconnected experience in the store,” said CEO Craig Menear.
Transactions over $900, representing about 22% percent of U.S. sales, were up 12.4%.”A few drivers behind the increase in big-ticket purchases were appliances, flooring, and certain Pro-heavy categories,” said Ted Decker, executive VP of merchandising.
In the third quarter, Home Depot will introduce PPG Timeless paint. The product carries a guaranteed one-coat coverage in both interior and exterior paint. PPG, says Decker, is “a brand that has been trusted by Pros for over 100 years.”
Home Depot posted second quarter comps in the U.S. of positive 6.6%. Lumber, electrical, tools, and flooring had double-digit comps in the quarter. Building materials, appliances, indoor garden, and décor were above the company average.
Pro Sales outpaced total company sales. “We saw strong comps across several lumber and building material categories, as well as categories like pipe and fittings, power tools, and wire,” said Decker.
In the quarter, Home Depot completed the acquisition of Compact Power. “Compact Power has provided larger jobsite equipment rentals at more than a thousand Home Depot stores since 2009. The acquisition is yet another investment to enhance our portfolio of service offerings for our Pros and though we have worked closely with the Compact Power Equipment team for many years,” said Menear.
After a drought of new U.S. store openings since 2013, the company has opened 3 new U.S stores so far in 2017. “Our new U.S. stores fill open voids and we are pleased with their initial sales performance,” said Carol Tome, CFO.
Housing starts slip in July
Housing starts took a step backward in July, both on a monthly and a yearly basis.
Total U.S. housing starts came in at a seasonally adjusted annual rate of 1,155,000 last month, down 4.8% over June and down 5.6% over July 2016.
June's rate was also revised down to 1,213,000, compared to the 1,215,000 estimate initially reported. And to put things in perspective, July's starts are down in comparison to this figure, which jumped ahead more than 8% between May and June.
Single-family starts came in at 856,000 last month, down 0.5% from June's figure of 860,000 (up from the 849,000 initially estimated).
As for what's coming down the pipeline: building permits clocked in at a seasonally adjusted annual rate of 1,223,000, down 4.1% from June, but up 4.1% from July 2016. Single-family authorizations stayed flat month-over-month at 811,000.
Regionally, declines occurred around the country except for in the South, which managed to eke out a 0.6% increase in total starts (and a 2.0% increase in single-family starts).
The Northeast also pulled in 9.8% more single-family starts, but was dragged down by the multi-family market to a total decline of 15.7%.