The Home Depot acknowledged Tuesday that the sour economy has had a larger impact on its sales to pros than it has on sales to consumers.
According to a transcript of the retail giant's conference call with analysts, Home Depot CEO and chairman Frank Blake noted that pros accounted for about 27% of the company's total sales in the second quarter of this year vs. 32% in the second quarter of 2008.
The company reported Tuesday that its overall sales for the second quarter fell 9.1% to $19.1 billion from nearly $21 million in the second quarter 2008. Taking the pro percentages into account, that would indicate pros accounted for $5.16 billion in April through June of this year compared with $6.72 billion in the same period last year. It also means The Home Depot's total pro sales dropped about 24% year-over-year while consumer sales fell off about 3%.
"What has happened in the downturn is that our pro business has declined more rapidly than our consumer business," Blake said.
The Home Depot defines a pro customer basically as anyone who gets paid to do repair or construction work. This group includes people who manage apartments and work in the government or military, along with the more traditional "sticks and bricks" customers. The pro also can be defined based on what it's not--namely, one of the Home Depot's two other major customer groups, the do-it-yourself and the "do it for me" market. Over the years, it has said that the pro accounts for 30% of sales even though it's just 3% of the retail giant's customer population.
"A key to returning positive comps for us will be the recovery of this important segment," Blake explained, referring to sales to pros. Globally, comparable sales fell 8.5% for The Home Depot while domestic comps dropped 6.9%.
Blake noted that The Home Depot's data regarding customer segments might not be completely accurate since pro customers are not always that easily to identify when shopping. "We've taken a different cut at the data set that looks more at buying behavior than an SIC code because the fact is pros don't come in with a little badge that says 'I am a pro'," Blake said.
"We're looking at buying behavior, so maybe the single most accurate way of saying it is people who bought like pros in 2008 this time versus people who were buying like pros in 2009 is down significantly," he added.
Marvin Ellison, executive vice president of U.S. stores, said pros "remain resilient" despite the poor economy and the MRO (Maintenance, Repair, and Operations) customer is trying to find new ways "to stay busy." But the economy might be impacting the buying habits of pro customers.
"Like the normal consumer, when the market gets more difficult then they find different ways to spend, their spending habits change," Ellison said. "But they still have to keep business going, and we spend a lot of time in the relationships we build with pro customers."
The retailer maintains a pro desk at its 1,974 stores in the United States and employs more than 200 sales reps that manage pro accounts.