2019 Hot 100 Retailers: Hardlines

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Poor weather in the early months of this year precipitated an uneven financial performance so far this year at The Home Depot. Same store sales rose just 2.5 percent, well below expectations, although online sales grew 23 percent. Customer transactions and average ticket prices both rose, as did net income. “There is no doubt it was a noisy quarter, but when you look through the noise to the core business, we are pleased with the underlying performance,” CEO Craig Menear said at the time.

The Home Depot isn’t letting the bumpy start to 2019 deter it from the mission that has been laid out: Enhancing stores to improve the customer experience, growing its base of professional customers and increasing online business across the board. A three-year plan to upgrade stores, with $11 billion budgeted for the project, includes installing in-store lockers to facilitate online order pickup and remodeling and streamlining the customer service desk. These efforts “are helping us to optimize store layouts to maximize merchandising space productivity,” Menear says.

Source: Kantar

The Home Depot has a separate platform for contractors and other professional customers and hopes to have 1 million pros using the site by the end of this year. Another area in which the company is courting professional customers is with tool rentals, making more tools available at more locations.

Unfortunately for The Home Depot, macro-economic factors worked against it in the first half of 2019. There were tariff concerns and market volatility regarding commodities like lumber, as well as an unexpected slowdown in the construction of single-family homes. Things looked so bad at one point that Hoya Capital Real Estate called home improvement retailers “the worst-performing housing industry sector this year.”

However, Hoya sees a few factors that could improve the environment, including highly favorable demographics, the aging of the U.S. housing stock and increased transactional efficiency spurred by real estate technology and data.

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