Home Depot posted record-breaking sales in the second quarter, largely thanks to consumers’ continuing push to fix up their homes during the coronavirus pandemic.
The home improvement giant raked in $38.1 billion in sales during the quarter, a 23.4% boost since last year.
Net earnings for the second quarter of fiscal 2020 were $4.3 billion compared with net earnings of $3.5 billion in the same period of fiscal 2019.
Home Depot and its home improvement sector rival Lowe’s have soared since the coronavirus pandemic began in March. Analysts have attributed the success of the retailers to a shift in consumer spending trends. With many shoppers stuck at home and canceling vacations and dining-out plans due to the pandemic, consumers have been dedicating more money to tackling home improvement projects.
According to financial data firm Facteus, Home Depot has overtaken Lowe’s head start when it comes to consumer spending. And foot traffic tracker Placer.ai reported that Home Depot saw a 19.1% and 19% year over year spike in foot traffic in June and July.
CEO Craig Menear, merchandising executive vice president Ted Decker, and chief financial officer Richard McPhail spoke to investors and analysts on the company’s Tuesday earnings call.
“The COVID-19 pandemic have forced us to change the way we live, work, and interact with each other,” Menear said, adding that Home Depot’s number one priority remains “the safety and wellbeing of our associates and customers.”
Home Depot has seen strong results since the beginning of the pandemic, although its second-quarter strategy saw the company take “a more localized approach” to in-store safety measures, according to Menear.
“I could not be more proud of the resiliency and strength that the team has demonstrated,” he said.
The CEO said that Home Depot has also pushed closing time from 6 p.m. to 8 p.m. in order to avoid “end of day bottlenecks.” He called out “healthy growth” from the company’s professional and do-it-yourself consumer bases, saying that customers are continuing to “take on projects throughout their homes.”
“These record results were driven by broad-based strengths across our stores and geographies,” Menear said.
Decker said that the company has seen an increase in basket size per customer, with shoppers reaching for “new and innovative items” more than before the pandemic. He said that interior departments like hard surface flooring, interior lighting, and painting have seen an especially “strong growth” with both new and existing customers.
“Our DIY customers are reengaging with their homes,” Decker said.
A third of Home Depot’s recently acquired customers have also “reengaged” with the company for new purchases in different departments, according to Decker.
McPhail said that comparative sales in the United States were up 25% for the quarter, with each of Home Depot’s 19 US regions posting “double-digit positive” comparative sales. He characterized the spike as one driven by “broad-based” demand.
In response to analysts’ questions, the Home Depot executives stressed that there is too much “uncertainty in our external environment” to extrapolate how the retailer will continue to perform as the pandemic drags on.
“The investments we have made across the business have significantly increased our agility, allowing us to respond quickly to changes while continuing to promote a safe operating environment,” Menear said in a statement published on Home Depot’s website. “This enhanced our team’s ability to work cross-functionally to better serve our customers and deliver record-breaking sales in the quarter.”
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