The Home Depot is taking steps "to be very aggressive and opportunistic" with its pro customers, a key market segment whose business isn't rebounding as fast as expected, executives for the building supply retailer told analysts today.
The executives' comments were a sidelight to a conference call with analysts regarding The Home Depot's announcement that its income for the quarter ended Aug. 1 rose 7% to $1.19 billion on a 2% rise in revenue to $19.41 billion. Revenue at stores open at least one year rose 1.7% worldwide and 1% in the United States.
But Atlanta-based Home Depot also said it now expects sales to climb 2.6% for the year, down from a previous forecast of 3.5% growth. "We're lightening our assumptions on ticket growth in large part because the pros are a little slower to come back than we thought," CEO Frank Blake said.
The Home Depot has said the pro customer--a group in which it counts maintenance crews and government and institutional employees along with professional builders and remodelers--typically accounts for 3% of all sales tickets but 30% of all sales. Thus, it makes up a big part of all sales tickets over $900, which account for roughly a fifth of all tickets. During the quarter ended Oct. 1, tickets over $900 fell 4.9% from the comparable year-earlier quarter, The Home Depot said, while tickets of $50 or less increased 2.4%.
In the second half of 2008, Blake said, pro-related sales were double-digit percentages below where they stood the prior year. Going into and through 2009, those numbers improved to where they were only behind the previous year's figures by single-digit percentages. "We're now in the low negative single digit on pro sales in our stores," he said. "We had anticipated in the back half [of 2010] a more significant recovery. ... "Now, just based on the performance in the second quarter, we see that as more gradually getting to flat and then slightly positive."
As that happens, The Home Depot plans to work harder at reaching pros, said Marvin Elliison, executive vice president for U.S. stores.
"We're going to be aggressive and opportunistic with the pro customers," he told analysts. "We're going to focus on staffing and service levels and getting them in and out really quick, which is a mandate that they've given us. We have a field team that is out there building relationships, understanding the needs of the pro. We're working with [Craig Menear, executive vice president for merchandising, and his team] to make sure we're merchandised the right way, we're priced the right way. So we're going to fight as hard as we can to take care of the customers. But again, as Frank said, we just don't anticipate robust growth in the second half."
Blake also said Ellison has launched a pro version of The Home Depot's customer FIRST program, which helps the company get a sense of how it's doing on customer service and how to improve. He didn't elaborate.