In the wake of a very successful Q2 that exceeded Wall Street expectations across the board, The Home Depot has boosted its guidance for the remainder of 2018. Home Depot now expects full-year revenue to climb roughly 7%, compared to a prior forecast of 6.5% growth. Same-store sales should be up approximately 5.3% in fiscal 2018, Home Depot said, up from a previous target of 5% growth.
In Q2 2018, Home Depot saw:
- Earnings per share (EPS) of $3.05 vs. $2.84 expected;
- Net income of $3.5 billion (a 31% year-over-year jump) vs. $2.7 billion expected;
- Revenue: $30.46 billion vs. $30.03 billion expected; and
- Same-store sales: up 8% globally vs. an increase of 6.6% expected.
The average ticket is getting more help from major purchases as well. Home Depot is now classifying its “big ticket purchases” as those above $1,000, an increase from the previous designation of $900. Even more impressive is that these big ticket purchases now represent 20% of U.S. sales, up more than 10% from Q2 a year ago.
Q2 also represents a seasonal bounceback for The Home Depot, which hit a bump in the road in Q1 during the spring season. The 4.2% comparable sales growth for Q1 was the lowest total for Home Depot since Q2 2015. The retailer attributed much of the decline to cold weather slowing purchases for gardening and remodeling projects. Gardening typically accounts for 15% to 20% of the retailer’s Q1 sales.
Ahead of Q2, analysts were concerned that significant investments in channel integration initiatives and the supply chain would undermine earnings, but rising home prices, a healthy housing market and high demand for home improvement items have thus far pushed back any potential headwinds.
Home Depot said earlier this year it plans to spend $1.2 billion during the next five years to bulk up its supply chain with 170 new distribution facilities by 2023, with the goal of getting online orders to shoppers more quickly. The company anticipates that the new facilities would reach 90% of the U.S. population in one day or less.
The retailer also has been bolstering its technology prowess, hiring 1,000 new professionals in 2018 to work in its tech centers in Atlanta, Dallas and Austin, Texas. The mass hiring is part of the company’s ambitious $11.1 billion, three-year strategic investment plan, which includes melding the physical and digital shopping experiences.