In the fiscal first quarter of 2020, Home Depot reported net sales grew 7.1% year-over-year to $28.3 billion. However, efforts to limit traffic in stores as a result of the coronavirus (COVID-19) pandemic had “significant” impact on sales and net earnings for the home-improvement retailer decreased $0.3 billion to $2.2 billion in the first quarter compared to the previous year. Comparable sales in the first quarter of 2020 were positive 6.4% and comparable sales in the U.S. were 7.5%.
As a result of COVID-19, Home Depot was forced to leverage its digital platforms as a means to reach customers. According to CEO and president Craig Menear, online sales increased approximately 80% during the quarter and more than 60% of the time customers opted to pick up online orders curbside. Home Depot said its digital business accelerated from 30% growth in early March to triple-digit growth by the end of April and daily traffic to the retailer’s website reached new records towards the end of the quarter.
Home Depot said sales to both do-it-yourself (DIY) customers and pro customers grew during the quarter. However, in a departure from recent quarters, DIY sales outpaced pro sales, according to executive vice president of merchandising Ted Decker. Home Depot’s definition of pro includes remodelers and builders, as well as maintenance, repair, and operating supply workers.
“We continue to have a high level of engagement with the pro, however certain states and municipalities restricted in-home activity, which had a direct impact on some of our pro customers,” Decker said on Home Depot’s earnings call. “In addition, certain social distancing actions we took during the first quarter also served as a headwind to pro activity.”
Menear said while DIY sales outpaced pro sales, pro activity experienced stronger growth towards the end of the fiscal first quarter as local economies moved into various stages of reopening. Sales among smaller pros outpaced sales among larger pros throughout the quarter at Home Depot.
“We saw more sale impact [for pros] in highly shelter-in-place regions versus states that moderated or no actions in place. So, the pros definitely faced some headwinds from state mandates,” Decker said. “We also had some restrictions in the form of inability to get permits issued or job site inspections completed. And there were [also] some headwinds with homeowners just having the reluctance to have crews working in their home when they were sheltered in place.”
During the first quarter, comp average ticket increased 11.1% and comp transactions decreased 4%, according to Decker. Lower traffic can be attributed to measures taken to emphasize social distancing and limit store traffic and the decision to cancel spring shopping events. Big ticket transactions at Home Depot, defined as purchases over $1,000, were up 2.5% in the quarter.
Menear and Decker said as state mandates are being lifted, pro business is expected to return, as in many cases jobs were postponed rather than cancelled.
Prior to disruptions from COVID-19, Home Depot had taken several steps towards developing a pro “ecosystem” in 2019, including onboarding pros on its B2B website, enhancing the interconnected shopping experience for pros, opening flatbed delivery centers to increase next-day delivery capabilities, and cultivating the One Home Depot experience.
