| Sarasota Herald-Tribune
Home Depot, the largest home improvement retailer in the world offers a variety home improvement material to both the retail and professional channels, this retail behemoth has 2,293 stores offering 30,000 products in-store and 1 million products online.
So many big box retailers have done well despite the setbacks of COVID compared to smaller mom and pop stores. Home Depot, Walmart, and Target are just a few. Meanwhile, Home Depot has made dramatic differences with their online shopping experience.
The company leverages its size to negotiate low prices with suppliers in much the same way other large retailers, such as Walmart, do and resulting in its fixed costs being spread across a large inventory of product. The result is a reduction in the cost of goods sold on a per item basis.
The company’s “One Home Depot” strategic plan is aimed at building omnichannel capabilities and focused on delivering an interconnected shopping experience.
Under the plan customer navigation through store aisles is enhanced and results in increased speed to the checkout counter. The introduction of digital price labels in the appliance department has also enhanced the shopping experience as customers can now view the online ratings and reviews, while in the store.
According to the company’s quarterly report, while physical stores are an integral part its business, Home Depot has come to realize that many in-store purchases are the result of online visits. Approximately 50% of all online orders in the United States are picked up from local stores, reflecting the relevance of brick and mortar.
This blended customer engagement across both channels is the basis for the company’s integrated retail strategy that encompasses both offline and online channels.
Home Depot is investing in its website and other digital applications to further enhance the online customer experience through improved search capabilities, site functionality, category presentation and product content.
And the company according to its reporting, continues to roll out automated lockers in stores to make picking up of online orders easy and convenient. Currently, automated lockers are available in about 1,100 stores. Stores with these lockers have witnessed an increase in sales of about 2.5% when compared to stores without lockers.
August 18 saw Home Depot report second quarter sales of $38.1 billion, a 23.4 percent increase from the second quarter of fiscal 2019. Comparable sales for the second quarter were up 23.4 percent compared to a year ago, and comparable sales in the U.S. were positive 25.0 percent.
Net earnings for the second quarter of fiscal 2020 were $4.3 billion, or $4.02 per share, compared with net earnings of $3.5 billion, or $3.17 per share, in the same period of fiscal 2019. For the second quarter of fiscal 2020, earnings per share increased 26.8 percent from the same period in the prior year.
In the second quarter, the company invested approximately $480 million in additional benefits for associates, including weekly bonuses for hourly associates in stores and distribution centers.
Year-to-date, the Company has spent approximately $1.3 billion on enhanced pay and benefits in response to COVID-19. Additionally, the Company’s first half performance resulted in a record payout for Success Sharing, the Company’s profit-sharing program for hourly associates.
Lauren Rudd is a Financial Advisor with Raymond James & Associates, Inc., member New York Stock Exchange/SIPC, located at 1950 Ringling Blvd #401 Sarasota, FL 34236. You can contact him at 941-706-3449. This market commentary is provided for information purposes only. The information provided is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of the author and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected.