Home Depot attributed its fourth-quarter gains in part to investments in multichannel retail. Seen here, an in-store locker for pick-ups of online orders.
By Alan Wolf, YSN
As quarantined consumers bedded their nests unabated, The Home Depot ended 2020 with a stellar fourth quarter.
But despite a 25 percent surge in net sales, to $32.3 billion, and a 15.3 percent hike in net income, to $2.9 billion, the share price of the No. 1 home improvement chain fell 6 percent after the results were released yesterday morning.
Investors were rattled by the uncertain outlook painted by CFO Richard McPhail on a fourth-quarter earnings call. Looking beyond the strong housing market, McPhail spoke of “significant uncertainty” over consumer spending due to key unknowns including the course of the pandemic, the distribution of vaccines and short-term fiscal policy.
“Given these uncertainties,” he said, and their impact on the broader economy, “we are limited in our ability to forecast demand for the year … We are not able to predict how consumer spending will evolve.”
All that’s known for sure, senior management implied, was the company’s solid sales performance for the period ended Jan. 31. That included strength in appliances and other big-ticket categories, with transactions over $1,000 up by 23 percent year over year, reported president/COO Ted Decker.
Outdoor goods, including patio furniture, grills and power equipment also enjoyed continued strength, he said, “as customers try to extend the outdoor living season.”
Decker acknowledged that Home Depot’s “massive sales volumes,” combined with ongoing port delays, put pressure on its supply chain, although the company made what he described as “significant improvements to our in-stock positions” through the back half of 2020.
Decker also attributed the chain’s success to its broad investments in digital. “Over the last several years we’ve rebuilt our website and invested across our platforms to upgrade our infrastructure and improve the shopping experience,” he said on the earnings call. “These investments allowed us to handle the enormous growth in web traffic and convert more of that traffic into sales.”
Specifically, HomeDepot.com enjoyed more than 3.6 billion visits and a double-digit increase in conversion rate across its app, mobile and desktop platforms during the past fiscal year.
“As we look forward to spring,” he concluded, “we know that now, more than ever, the home has never been more important.”