Home Depot shares rise after earnings top estimates, CEO says investments are paying off


A Home Depot store in Miami, Florida.

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Home Depot is set to report earnings for the fourth quarter before the bell Tuesday and update investors on whether its significant investments in the company are paying off.

Here’s what analysts expect, based on Refinitiv data:

  • Earnings per share: $2.10, adjusted
  • Revenue: $25.76 billion
  • Same-store sales: up 4.7% in the U.S.

The Atlanta-based home improvement retailer’s shares have been trading near an all-time high, buoyed by a strong U.S. economy and a housing market with appreciating home values. But it’s been under pressure as it spends billions of dollars to integrate its brick-and-mortar stores and its online business. It announced in 2017 that it would invest about $11 billion over three years as part of its “One Home Depot” program. It cut its forecast twice in 2019, saying it was taking longer to see the benefits of that spending.

Home Depot leaders have said its investments will peak in 2020. The company plans to spend $3.9 billion, up from $3.6 billion in 2019 and $3.3 billion in 2018.

Home Depot executives said in December that its forecast for 2020 sales would be below Wall Street expectations and its margins would be pressured by its investments. That news caused the company’s shares to temporarily fall.

Home Depot’s investments have fueled changes, such as improving signage to make its big-box stores easier to navigate, revamping its supply chain to speed up deliveries and adding lockers in stores for pickup of online purchases.

At an investor and analyst conference in December, Home Depot CEO Craig Menear said the company’s investments “are largely on track, and we are realizing benefits, but there is more work to do to unlock the full value of the One Home Depot experience.”

“We are perhaps a bit ambitious with regards to the speed with which these benefits will be seen in 2019,” he said at the conference.

Investors will also listen Tuesday to hear if Home Depot and its supply chain will be hurt by the coronavirus outbreak. About 70% of the company’s products are sourced from the U.S., but 30% come from other parts of the world — with much of that coming from China, according to company spokeswoman Sara Gorman.

Home Depot is gearing up for spring, its busiest sales season. Home Depot said that it plans to hire 80,000 additional employees, with many part-time hires staffing its garden center. That’s on par with seasonal hiring in recent years.

Home Depot is the largest home improvement chain in the country. It has about 2,290 retail stores and more than 400,000 employees across the U.S., Canada, Mexico.

This is breaking news. Please check back for updates.

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