Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Home Depot Inc (HD, Financial) reported a 6.6% increase in sales for the third quarter, reaching $40.2 billion.
- Mexico and Canada posted comps above the company average, with Mexico achieving positive comps.
- The company expanded its delivery capabilities, reaching 90% of the US population with same or next-day delivery.
- The SRS acquisition is on track to deliver $6.4 billion in sales for the approximately seven months of ownership in fiscal 2024.
- The Home Depot Inc (HD) saw positive engagement in seasonal categories and increased online sales by 4% compared to the previous year.
Negative Points
- Comp sales declined 1.3% from the same period last year, with US stores experiencing a 1.2% decline.
- Higher interest rates and macroeconomic uncertainty continue to pressure larger remodeling projects.
- Gross margin decreased by approximately 40 basis points from the previous year, primarily due to the SRS acquisition.
- Big ticket comp transactions over $1,000 were down 6.8% compared to the third quarter of last year.
- The company expects adjusted diluted earnings per share to decline approximately 1% for fiscal 2024.
Q & A Highlights
Q: Can you provide more details on the impact of hurricanes on sales and how it affected different categories?
A: William Bastek, Executive Vice President of Merchandising, explained that the hurricane impact was similar to past events, with increased sales in generators, cleanup supplies, and lumber. Richard McPhail, CFO, added that the guidance reflects the outperformance in Q3 due to hurricanes and favorable weather, with some expected impact in Q4.
Q: How do you categorize your business between needs-based and discretionary projects, and how have these trended?
A: Edward Decker, CEO, noted that needs-based projects are being completed, but larger discretionary projects are being deferred due to the higher interest rate environment. This trend has been consistent throughout the year.
Q: Can you discuss the progress with SRS and the cross-selling opportunities?
A: Edward Decker, CEO, stated that SRS is performing well, focusing on growth through existing branches, new branches, and acquisitions. Cross-selling opportunities are being explored, with SRS products being offered through Home Depot's Pro Desk and outside sales resources, showing strong growth.
Q: What are the expectations for gross margins, and how does SRS impact them?
A: Richard McPhail, CFO, explained that the major impact on gross margin was from the mix impact of SRS, which was about 80 basis points for the quarter. The annualized impact of SRS on gross margin is expected to be about 70 basis points.
Q: How is Home Depot performing in terms of market share, and are there specific categories where you are gaining share?
A: Edward Decker, CEO, mentioned that Home Depot is likely taking market share, as indicated by outperforming industry metrics and competitors. William Bastek, EVP of Merchandising, highlighted strong performance in seasonal categories, paint, and building materials.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
