Home Depot’s Q2: The tale of the tape
The Home Depot’s Craig Menear, executive VP merchandising, said the company’s strong 4.3% comp-store sales performance in the second quarter was boosted by outdoor projects, storm-related repairs and steady strength in core departments.
Performance was aided by Home Depot’s improved supply chain and merchandising tools, he said.
"At the end of the first quarter, we chose to carry more inventory to keep our stores fully stocked with seasonal product," Menear told analysts during the company’s earnings-report conference call. "This was the right decision. Improvements in the weather combined with our merchandising tools and enhanced transportation network allowed us to end the first half with inventory turns flat to last year."
Departments that beat the company average comp included building materials, electrical, kitchens, indoor garden, outdoor garden and tools. Comps in lighting were flat, he said, while lumber and millwork showed negative comps for the quarter.
Menear said that market share gains were captured in five of 13 departments in the quarter — flooring, plumbing, electrical, lighting and kitchens.
The heat wave contributed to strength in the company’s "air movement" category — ceiling fans, air conditioners and portable fans showed double-digit positive comps in the quarter, he said.
Menear pointed to a handful of innovative products positioned well for the third quarter. Among them: DeWalt hand tools and its new line of 20-volt lithium ion power tools, Home Decorators Collection faux wood blinds, Martha Stewart Living specialty finishes and Trim & Door paint by Glidden.
Supply chains are the key to
Supply chains are the key to the development of industry worldwide. I have started this business recently, I own a small restaurant, but before opening it I have made a lot of research on the supply chains, restaurant supply store providers, and many other things I should know, like accounting practice and legal regulations. The fact that the supply chain industry is in full growth makes me think I will probably be able to enhance my income in the next few years. More supply agents means more competitive names on the market, which leads to more affordable supplies, isn`t this true?
NAHB sees “stability” in housing-construction report
While Tuesday’s residential construction report showed a slight decline in total housing starts for the month of July, the National Association of Home Builders (NAHB) described a larger picture of a relative stability.
"Although single-family housing production slid a few notches in July, the number was right in line with the second-quarter average, so we view this report as an indication of relative stability," said Bob Nielsen, chairman of the NAHB and a home builder from Reno, Nev. "This is in keeping with the fact that not much has changed over the past several months with regard to the outlook for new-home sales and production. Both builders and buyers continue to exercise a great deal of caution due to uncertainty about the current economic climate, the large number of foreclosed homes on the market and concerns about access to credit."
Housing starts in July declined 1.5% to a seasonally adjusted annual rate of 604,000. Single-family starts declined 4.9% to a pace of 425,000.
"Overall housing production held relatively steady in July, with construction of new multi-family projects showing greater strength due to higher demand for rental units," noted NAHB chief economist David Crowe. "Going forward, we expect housing production to show modest improvement through the end of this year, particularly in select markets that do not have large inventories of distressed homes and where economic stability is more apparent."
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Fastenal eyes expansion, plus vending machines
Winona, Minn.-based Fastenal intends to expand its construction and industrial supply business by opening more locations and adding vending machines, according to an article in the Sacramento Business Journal.
The 2,500-plus national chain plans to open one store per year in the Sacramento region, relying more on face-to-face transactions than shipping orders. The company also wants to establish more contracts with school districts and government entities that may have been making purchases at stores like Home Depot or Lowe’s.
Increased vending machine business is another Fastenal initiative. These devices dispense items such as safety gloves and glasses, batteries, cutting tools and respirators. Companies that host the machines for the use of their employees aren’t charged until the individual item is dispensed. Vending customers include manufacturers, construction and maintenance companies.
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