The Home Depot, Inc.
CEO : Mr. Edward P. Decker
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q4 | 0.3% YoY | -1.5% | 1.9% | 2023-02-21 |
Richard McPhail says,
Key Points from HD Q4 2022 Earnings Call Transcript
- Total sales for the fourth quarter were $35.8 billion, up 0.3% compared to last year
- Gross margin for the quarter was 33.3%, up seven basis points from last year
- Total company comp sales increased 3.1% for the year and US comp sales increased 2.9%
- Operating expenses were 20% of sales for Q4, up 32 basis points from last year
- The effective tax rate for fiscal 2022 was 23.9%
- Diluted earnings per share for Q4 were $3.30, up 2.8% compared to Q4 of 2021
- The company returned approximately $6.5 billion to shareholders in the form of share repurchases
- The company’s targets for 2023 include flat sales and comp sales growth, an operating margin target of 14.5%, and a mid-single-digit percentage decline in diluted earnings per share
- If lumber prices remain at current levels, it would equate to approximately 100 basis points of pressure to comp sales and an insignificant impact to earnings
Ted Decker says,
Financial Performance
- Fiscal 2022 sales reached $157.4 billion, a record high with an increase of over $6 billion from the previous year.
- Diluted earnings per share increased by 7.5% to $16.69 compared to last year.
- Over the past three years, the company has grown sales by over $47 billion and delivered diluted earnings per share growth of over 60%.
Customer and Associate Experience
- The company invested in improving the shopping experience through new store leadership structure, productivity improvements, and new tools and technology in stores.
- The interconnected business saw increased app engagement, downloads, and conversion with the rollout of several enhancements.
- The supply chain build-out reached an important milestone earlier this year, with all appliance delivery volume managed through market delivery operations.
Market Environment
- The company observed a resilient customer throughout most of fiscal 2022, who was less price sensitive than expected in the face of persistent inflation.
- However, in the third and fourth quarter, there was a deceleration in certain products and categories, which led to slightly softer than anticipated fourth quarter comps.
- The company is closely monitoring elasticities and trends and believes it has the tools, team, and experience to manage in any environment.
Annualized Compensation and Dividend Increase
- The company announced an increase in annualized compensation by approximately $1 billion for frontline hourly associates.
- The Board approved a 10% increase in the quarterly dividend to $2.09 per share, equating to an annual dividend of $8.36 per share.
Financial Outlook for 2023
- The company targets approximately flat comp sales and a mid-single digit percent decline in diluted earnings per share compared to last year.
- The company believes the long-term underpinnings of its market remain strong and it is well positioned to capitalize on compelling growth opportunities in its space.
Q & A sessions,
Favorable Business Trends
- Business growth of $47 billion over the last three years
- Earnings growth of 60% over the last three years
- Healthy customer base with good jobs, job growth, growing wages, and strong balance sheets
- Pro backlogs are still healthy, although off their peak from last year
Moderating Year in 2023
- Expectation of moderation in home improvement demand due to inflation and rising interest rates
- Customers are shifting spend towards services
- Expecting a one-for-one offset in transactions due to inflation
- Expecting a flat guidance for 2023
Investment in Associates
- Increased starting wages for associates with an investment of $1 billion
- Addressed wage compression for tenured associates
- Improved retention for exceptional associates
- Investment is consistent with company values and is expected to improve customer experience
Focus on Interconnected Frictionless Shopping Experience
- Laser-focused on delivering the best interconnected frictionless shopping experience
- Targeting share shift despite a shifting environment
- 100% focused on building out capabilities to capture more share of wallet with the Pro
Hypothetical Case Scenario
- If the share of PCE that the market holds were to shift all the way back to 2019 levels by the end of the year, it would imply pressure of mid-single-digit percentages
Home Prices and Housing Turnover
- Home prices peaked in June of 2022 and have regressed by about 3% since that point
- No relationship with comp sales and home price appreciation or correction
- No significant impact from housing turnover to date
No bad stock 