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Home Depot 4Q18 earnings and revenue come up short

Home Depot on Tuesday (26 February) reported 4Q18 quarterly earnings and sales, which came in below Refinitiv consensus analyst expectations. In addition, the US’ biggest home-improvement retailer also gave a weaker-than-expected profit and sales outlook for FY19. Adjusted EPS came in at $2.09 vs the $2.16 Refinitiv consensus analysts forecasts had expected, and the $1.52 reported in 4Q17. Revenue rose 11% YoY to $26.49bn but was still slightly below the expected $26.57bn. These results included a pre-tax impairment charge of c. $247mn (USc16/share) tied to Home Depot’s wholesale business, Interline Brands.

Same-store sales advanced 3.2% YoY, missing the projected growth of 4.5% YoY. Home Depot said customer transactions rose 7.7% during the quarter, while the average shopper’s ticket increased by 2.5% and sales per square foot were up 4.9%.

The company explained that it was unprepared for the “extent of unfavourable weather” nationwide during the quarter under review, with CEO Craig Menear noting (on the conference call) that wet weather “delays projects, and that is evidenced in our sales performance in the quarter,”. According to CFO Carol Tome, weather-driven demand negatively impacted sales by 0.85%.

The firm announced a dividend increase of 32% YoY, to $1.36/share, and a new $15bn share repurchase programme.

Home Depot has also been spending quite aggressively on its e-commerce business in order to narrow the time it takes to get shipments to shoppers’ homes. The firm said in July 2018, that it planned to spend $1.2bn over the next five years on its supply chain.

Looking ahead, for FY19 (which includes 52 weeks vs 53 weeks in FY18), Home Depot said it expected to earn $10.03/share – USc0.23 short of Refinitiv consensus analysts’ forecasts. Home Depot is calling for same-store sales to be up 5% YoY in FY19, with revenue rising c. 3.3% YoY.

Home Depot shares fell around 1% on Tuesday (26 February) following the results.





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