Need to Know
- In an earnings call this week, Home Depot reported Q1 sales of $28.3 billion up 7.1%. Net income however, dropped 10.7% to $2.2 billion.
- Digital sales and engagement have skyrocketed. Sales that leveraged Home Depot’s digital platforms increased by approximately 80%. More than 60% of the time, customers opted for curbside and in-store pickup.
- The home improvement retailer attributes the slight dip in net income to increased operating costs from expended worker benefits including expanding paid time off and weekly bonuses for its employees affected by the coronavirus pandemic.
- “During the last three weeks of the quarter, traffic to homedepot.com was consistently above Black Friday levels,” according to Ted Decker, EVP of merchandising.
With shelter-in-place orders in effect around the globe, retailers have had to adapt to connect with consumers, focusing heavily on digital offerings. One category that has seen an uptick in interest, home improvements; Google Trends reports a steady incline on the search term since the orders took effect last month Inline with the trend, Home Depot’s Q1 report shows tremendous growth in both its online engagement and digital sales.
“As shelter-in-place orders were rolled out across the country in mid to late-March, we saw our digital businesses accelerate from approximately 30% growth in early March to triple-digit growth by the end of April,” said Ted Decker, EVP of merchandising for Home Depot on an earnings call.
Towards the end of the quarter the retailer reported its daily web traffic reached new records, with the last three weeks above Black Friday levels. In addition to web traffic, Home Depot’s mobile app downloads nearly doubled from their normal quarterly rate and e-mail and My Account engagement tripled.
Along with engagement, digital sales also increased. “Sales leveraging our digital platforms increased approximately 80% in the quarter. And more than 60% of the time, our customers opted to pick up their orders at a store,” Craig Menear, president and CEO, Home Depot reported on the call.
Despite positive growth and engagement, the retailer reported a dip of 10.7% in quarterly earnings. Home Depot attributes the loss to its increased operational costs. The retailer spent $850 million on expanded worker benefits during the quarter. Expanding paid time off for all hourly associates, providing additional paid time off for associates over 65, extending dependent benefits, and providing weekly bonuses for hourly associates.
In 2017 the largest home improvement chain in the world invested $11 billion into a digital transformation plan called “One Home Depot”. The plan merges its brick-and-mortar and e-commerce shopping experiences, into one unified strategy ensuring its customers have the same experience regardless of where they purchase.