Home Depot (HD) Q1 2020 Results

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Home Depot shares fell nearly 3% on Tuesday after the company announced a large increase in first quarter sales, but profits were weighed by the additional costs associated with the coronavirus pandemic.

For the first quarter ending May 3, The Home Depot said net income fell 10.7% to $ 2.25 billion, or $ 2.08 per share, from 2 , $ 51 billion, or $ 2.27 per share, a year earlier. Analysts polled by Refinitiv expected the company to earn $ 2.27 a share.

Revenues for the quarter increased 7.1% to $ 28.26 billion from $ 26.38 billion a year earlier, exceeding analysts’ expectations of $ 27.54 billion. Home Depot same-store sales increased 6.4%, exceeding expectations by 4.4%, according to estimates by StreetAccount.

However, it’s hard to compare the reported earnings with Home Depot’s first-quarter analyst estimates as the coronavirus pandemic alters customers’ buying habits and adds additional labor and security costs for companies.

The Home Depot said it had taken a number of steps to raise the wages of its employees during the pandemic. The company said it has extended paid vacation time for all hourly workers, as well as for non-hourly workers deemed at risk of Covid-19 infection by guidelines from the Centers for Disease Control and Prevention. It also provided more incentives to keep workers, like doubled overtime and weekly bonuses, the company said, as well as additional benefits.

All told, The Home Depot said it cost them $ 640 million after tax, or about 60 cents a share.

The Home Depot has had some advantages in the pandemic compared to other retailers. It was considered an essential retailer in most states, so its stores remained open. He is invested in e-commerce and online offers, such as curbside pickup. And spring is historically the busiest time of the year for the home improvement industry.

The Atlanta-based retailer previously said it plans to invest $ 3.9 billion in 2020 to continue integrating its online business with its traditional stores. The year is expected to be the peak of an $ 11 billion investment over three years. The investments have helped Home Depot shorten delivery times and develop a more user-friendly website. He also sought to streamline curbside pickup with automated lockers for customers.

The company previously said it would hire an additional 80,000 workers, with many part-time hires for its garden center, on par with spring hires in recent years despite the disruption caused by the coronavirus pandemic.

However, the company said it had canceled major spring season promotions that cause pedestrian traffic in stores, such as events similar to Black Friday. It also imposed social distancing in its stores and distributed thermometers to employees working in stores and distribution centers so that they could monitor their temperatures.

—CNBC Melissa repko contributed to this report.

Correction: A title incorrectly indicated that Home Depot sales had dropped.

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