Home Depot’s sales to pro customers posted double-digit growth in the fiscal first quarter, again outpacing sales growth to DIY customers for the retailer. Sales to pros posted a fourth consecutive quarter of accelerating growth and the best quarterly growth rate on record as many pros continue to see strong demand with growing backlogs.
Total sales for Home Depot increased 32.7% on a year-over-year (YOY) basis to $37.5 billion in the fiscal first quarter of 2021. Comparable sales increased 31.0% and U.S. comps increased 29.9% in the first quarter. Thirteen of the retailer’s 14 merchandising departments posted comps at or above 20% in the first quarter, the average ticket increased 10.3% YOY, and comp transactions increased 19.1%, according to president and COO Ted Decker. Inflation from core commodity categories positively impacted average ticket growth by approximately 375 basis points during the quarter.
“The ticket is being driven by a multitude of things,” chairman and CEO Craig Menea said on Home Depot’s quarterly earnings call. “Yes, there is inflation and we’ve been able to pass-through. But it’s also driven by the fact that our pro business strength drives a higher average ticket.”
Early in the coronavirus (COVID-19) pandemic, Home Depot made investments in technology and infrastructure to extend its in-store focus by offering curbside pickup for customers. The retailer also converted a market delivery center facility to a direct fulfillment center in order to reduce online delivery lead times. Home Depot continues to see the benefits of its digital platform investments, as digital sales grew 27% on a YOY basis in the first quarter and approximately 55% of online orders were fulfilled through a store.
Menear said the retailer was able to leverage the scale of its supply chain to maintain in-stock positions amid a quarter impacted by supply chain disruptions. The company also rolled out new capabilities, such as mixed cart selling, allowing products from both the retailer’s website and store to be added to a single transaction from stores, to remove friction for customers and associates.
“We are focused on continuing to leverage the momentum of our strategic investments to further enhance the interconnected shopping experience,” Menear said. “The build out of our One Home Depot supply chain vision is a wonderful example of our strategy and action. Enhanced fulfillment capabilities will not only create a better customer experience, but they will also expand the breadth of our current opportunities from both a product and customer standpoint.”
Home Depot’s big ticket comp transactions--defined as transactions over $1,000--increased 50% on a YOY basis. Decker said the company experienced widespread big ticket strength, with notable outperformance in lumber, vinyl plank flooring, and many of Home Depot’s installation services.
Home Depot had a strong quarter in its supply chain development, according to executive vice president of supply chain and product development Mark Holifield, and the company is on track to continue to increase its fulfillment square footage over 70% in 2021.
“We have four flatbed DCs [delivery centers] open in various stages or ramping. Dallas is the furthest along, it;s ahead of our plans in terms of the flatbed sales comp, which are very strong not just in dollars, but also in units and in number of deliveries,” Holifield said on the earnings call. “Our customer satisfaction has improved by 11 percentage points and notably our pro penetration is very strong. In fact, the preponderance of sales out of [the Dallas] facility are in fact pro.”
Holifield said Home Depot is on track for its goal of opening 35 flatbed delivery centers, with several planned openings in 2021. The company opened eight market delivery operations in the first quarter of 2021, well on pace to meet the retailer’s goal of 100.
