The Home Depot’s first-quarter sales to pros grew 5% from a year ago compared with a 7% increase among its consumer market, company representatives told analysts in a call this morning. Large pro customers, whose annual tickets surpass $10,000 made up 12% of the big-box retailer’s pro base for the period ended April 29, saw sales jump 11% during that time. The differentiation between "large" and "small" pros comes as the company continues its efforts to expand is pro market share following the year-ago launch of its “First for Pro” initiative.
The company has historically classified 3% of its customers as “pros,” crediting them for 30% of sales. Yet who the retailer defines as a pro often ranges from maintenance and government workers to homebuilders and remodelers.
CEO Frank Blake told analysts that the availability of new consumer analytics metrics is lending credence to a “working hypothesis” that the larger pros, often better able to secure credit amid a sluggish market, are beginning to recover with the result being an “outsized recovery” as compared with the consumer segment.
Still, Marvin Ellison, executive vice president of U.S. stores, said the growth among large pro customers shouldn’t be attributed to a full-fledged housing recovery. Although it’s likely that the bigger annual tickets belong to homebuilders and remodelers, Ellison said that moderate demand for building and remodeling work is filling the docket for large pro customers, inhibiting demand for contract work from trickling down to the small pro segment.
A 453-basis-point increase in the stores’ service score, which includes checkout times, and product availability and pricing, are also fueling the growth of the large pro market, Ellison said.
Chief financial officer Carol Tomé responded to questions regarding the company’s efforts to bring in the smaller pro customers whose demand is currently outpaced by pro customers pulling in bigger annual tickets. She said there is no plan yet to adjust the $6,600 average pro line of credit, but that the company currently has a 70% approval rate.
Overall, an unusually warm winter drove overall transactions to their highest point in company history, Tomé said, adding that a slowdown near the end of the quarter will likely continue into 2Q. Profits jumped 27.5% from the year-ago period to hit $1.03 billion. Net sales increased nearly 6% from the year-ago period to $17.8 billion, while gross profit margins held at roughly 34%.