Home Depot CEO Craig Menear: “We continue to invest in our digital assets.”
By Alan Wolf, YSN
The Home Depot reported a winning third quarter this week, which senior management attributed to two main factors: housebound consumers investing in their homes, and the record growth of digital commerce.
Addressing the latter, chairman/CEO Craig Menear told analysts on an earnings call Tuesday that digital sales for the period were up 80 percent over last year, representing an increase of $2 billion. What’s more, about 60 percent of those online orders were retrieved at a store, validating the company’s multi-channel “One Home Depot” strategy.
“As customers engage with The Home Depot, we see a continued blend of both the physical and digital worlds,” he said.
Nevertheless, Menear acknowledged that digital traffic is up dramatically across the company’s desktop, mobile app and mobile web platforms, with app and mobile web in particular experiencing what he described as “hyper growth.” What’s more, conversion rates for app and mobile shopping are also up, he noted, despite their traditionally fewer transactions compared to desktop.
“Our app downloads are way up, our active app users are way up, our orders are up,” he said.
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Accordingly, Home Depot is continuing to invest in its digital assets and is introducing “new capabilities and different way to engage” with the home improvement chain. As an example, Menear cited the decorative lighting category, which was enhanced online with better product images and more lifestyle photos.
“As a result of these changes and increased marketing effort to better highlight our offering, we have seen significantly higher customer engagement with the category online which helped to drive sales growth above the company average in the quarter,” he said. “We are focused on continuing the momentum of our strategic investments to enhance the interconnected shopping experience and position ourselves for continued share capture over the long term.”
All told, the company invested about $470 million back into the business in the third quarter in the form of capital expenditures, he noted.
Elsewhere on the call, recently promoted president/COO Ted Decker said home appliances delivered “strong performance” during the quarter, with big-ticket transactions of $1,000 or more rising 23 percent.
On the subject of Black Friday, Decker said the company made deeper buys on fewer SKUs to provide customers with “great values,” and, in light of the pandemic, extended the promotional period to lessen crowds on the day after Thanksgiving.
Despite the successful quarter — net sales were up 23 percent to $34 billion, U.S. comparable store sales rose 25 percent year-over-year, and net earnings increased 21 percent to $3.4 billion for the three months ended Nov. 1 — Home Depot’s shares took a hit when it revealed plans to reward its frontline hourly sales associates with higher pay. The increases will total $1 billion annually and follow about $1.7 billion in pandemic-related bonuses that were paid out through the third quarter.
Explained Menear, “Our ability to grow the business by more than $15 billion through the first nine months of the year while navigating the global pandemic and supporting our communities through multiple natural disasters is a direct result of our associates’ extraordinary efforts.”
Looking ahead, CFO Richard McPhail said strong demand for home-related products and positive housing market fundamentals are expected to continue. “Our customers tell us their homes have never been more important and they intend to continue their investment in the improvement of their homes,” he said.
