Staff Costs Hit Profit At Home Depot -- WSJ
20 Maio 2020 - 04:02AM
Dow Jones News
By Matt Grossman
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 20, 2020).
Home Depot Inc. reported an 11% decline in quarterly earnings as
costs from boosting workers' pay and benefits during the
coronavirus pandemic offset higher sales from locked-down customers
doing more projects around the house.
Home Depot was among a small group of retailers whose stores
have remained open as much of the country was forced to shut down.
That led to higher sales, driven in part by strong growth online,
but also increased expenses as the company took steps to support
its employees.
The added employee benefits -- which included weekly bonuses and
expanded paid time off -- totaled $640 million in the quarter ended
May 3. Chief Financial Officer Richard McPhail said much of that
was from paid-leave expenses that won't recur in the future.
"We have seen the full impact occur all in the first quarter,"
Mr. McPhail said. He added that other enhanced compensation, such
as higher overtime pay, has continued into the second quarter.
Revenue rose a better-than-expected 7.1% in the quarter. The
rise partially reflected more interest in do-it-yourself projects,
the company said, as people faced stay-at-home orders during the
pandemic.
"Clearly, the customer is reengaged with DIY," Chief Executive
Craig Menear said.
Sales from Home Depot's digital platforms grew by about 80% in
the quarter as people favored online shopping over in-person
browsing during the pandemic, Mr. McPhail said. He added that the
online sales bore out the company's past technology
investments.
"Demand for buy online, pick up in store really took off," Mr.
McPhail said.
Customers spent an average of $74.70 per transaction during the
quarter, up 11% from a year earlier, while the number of
transactions fell 3.9%. The pattern reflected people's desire to
limit trips to the store, Mr. Menear said.
The company said comparable sales -- which compares sales at
stores opened more than a year -- rose 6.4% overall and 7.5% in the
U.S. during the period.
Home Depot's report came on the same day as Walmart Inc., which
also reported strong revenue growth, boosted by e-commerce
sales.
Home Depot said that despite positive sales trends in the first
quarter and the first two weeks of the current quarter, it was
withdrawing its guidance for the year because of uncertainties
related to the pandemic.
Shares of Home Depot fell 3% Tuesday to $238.10. The stock, a
member of the Dow Jones Industrial Average, has bounced back
strongly since its selloff in March. Shares are up 9% this year,
despite the declines Tuesday, and is the second-best performer on
the Dow, behind only Microsoft Corp.
Overall, for the first quarter, Home Depot's earnings fell to
$2.25 billion from $2.51 billion as expenses rose 17%. The
company's latest per-share earnings of $2.08 included 60 cents of
costs from the added employee benefits; analysts polled by FactSet
were expecting earnings of $2.30 a share.
Revenue rose to $28.26 billion from $26.38 billion, and
surpassed the average analyst estimate of $27.56 billion on
FactSet.
Write to Matt Grossman at matt.grossman@wsj.com
(END) Dow Jones Newswires
May 20, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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