Home Depot reported its highest quarterly sales and earnings in company history during the company’s fiscal second quarter. Sales increased 6.5% on a year-over-year basis in the quarter to $43.8 billion while net earnings increased from $4.8 billion to $5.2 billion in the quarter. While both Pro sales and DIY sales increased during the quarter, Pro sales once again outpaced DIY sales for the home-improvement retailer.
“We saw growth for both our Pro and DIY customers in the quarter and are encouraged that project backlogs remain healthy,” CEO and president Ted Decker said during the company’s quarterly earnings call. “While the business performed very well and our consumers remain resilient through the first half of the year, we are navigating a unique environment. We can’t predict how the evolving macroeconomic backdrop will impact our customer going forward.”
Decker says Home Depot continues to invest in its pro ecosystem, including enhanced fulfillment, a more personalized online experience, and business management tools designed to drive engagement with pro customers. Additionally, in May the retailer launched new capabilities for its B2B Pro website to enhance the “interconnected shopping and quoting experience” for pros, according to Decker.
“In the past, our website was not integrated with our ordering and quoting systems, so an associate could not seamlessly modify an order if a customer had questions or changes before placing an order,” Decker said. “Our new interconnected capabilities remove friction for both Pros and associates, allowing them to collaborate on orders both in-store and online.”
Jordan Broggi, senior vice president of finance at Home Depot, said Pro loyalty customers are outperforming the average customer and customers logged into the B2B experience online “pretty significantly” outperform customers on the retailer’s general consumer website. The retailer has made several enhancements to the Pro Xtra loyalty program that have driven engagement and enrollment, such as linking the loyalty program to commercial credit cards.
Home Depot is investing in its supply chain to enhance the Pro ecosystem. Executive vice president and chief financial officer Richard McPhail said the retailer’s goal is to build a delivery network capable of reaching 90% of households with a same-day, next-day service on parcel and big and bulky items. Thus far, the company has opened 85 of its 100 planned market delivery options. Home Depot also has completed its 11 planned direct fulfillment center expansions, which serve both the parcel and big and bulky delivery. The company will finish 2022 with about 15 flatbed distribution centers as well, half of the retailer’s ultimate goal.
“To serve our Pros, it’s really about removing friction through a multitude of enhanced product offerings and capabilities,” Hector Padilla, executive vice president of outside sales and service, said on the earnings call. “New supply chain assets allow us to do that at a different level. But it also includes digital tools and personalized experienced, multiple fulfillment options for reliable delivery, our Pro Xtra loyalty tool, and other value-added offerings such as credit, tool rental, and quote center. And for our larger Pros, we have to serve them with a single point of contact. Hence why we’re expanding our onsite sales team and building an onsite sales team.”
Quarterly Highlights
All of Home Depot’s merchandising departments posted positive comps during the second quarter, with building materials, plumbing, millwork, paint, and hardware categories all above the company average. According to executive vice president of merchandising Jeff Kinnaird, the comp average ticket increased 9% during the second quarter, while comp transactions decreased 3.1%.
Big ticket comp transactions, classified as transactions over $1,000, increased 11.6% compared to the second quarter of 2021, according to Kinnaird. Several Pro-heavy categories, including pipe and fittings, gypsum, and fasteners, experienced big ticket growth on a year-over-year basis.
“We’re encouraged by the continued momentum we are seeing with our Pros and they tell us their backlogs remain healthy,” Kinnaird said. “During the quarter, we saw a robust project demand across the business. This can be seen in the double-digit comp performance of our building materials, plumbing, and millwork departments, as well as in certain project-related categories like fencing, siding, conduit boxes, fittings, tubs and showers, and countertops.”
During the quarter, sales leveraging digital platforms increased 12% on a year-over-year basis. The retailer saw record downloads, traffic, and sales via its mobile app. For customers who interacted with Home Depot online, more than 50% of online orders were fulfilled through stores.
