Home Depot posted strong results for both the fourth quarter and the full 2020 fiscal year. Sales for the home-improvement retailer increased 25.1% on a year-over-year (YOY) basis in the fourth quarter to $32.3 billion, marking the third consecutive quarter of YOY growth above 23%. Comparable U.S. sales in the fourth quarter increased 25.0% for Home Depot. For the full fiscal year, sales were $132.1 billion, a 19.9% increase from sales for the 2019 fiscal year. While DIY activity increased significantly during 2020 due to the coronavirus (COVID-19) pandemic, Home Depot said pro sales accelerated as the year progressed and the fourth quarter marked the strongest quarter for the cohort in 2020.
“As we’ve mentioned all year, our smaller pro customers maintained consistent growth and posted strong double-digit growth in every month of the quarter,” Ted Decker, president and COO at Home Depot, said in the company’s fourth quarter earnings call. “Growth from our larger pro customers continued to accelerate, also growing double digits each month of the quarter.”
The coronavirus (COVID-19) pandemic required Home Depot to make 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, according to chairman and CEO Craig Menear. Home Depot leaned more heavily into its digital platforms during the spring of 2020 to reach customers and drive sales; during the fourth quarter, the retailer reported digital sales increased 83% on a YOY basis and approximately 55% of online orders were fulfilled through a store. Looking at the full fiscal year, Home Depot reported sales leverage in its digital platforms increased approximately 86% compared to 2019.
Menear said Home Depot executed on several components of its One Home Depot strategy during 2020, such as opening various supply chain facilities, making technology investments, and enhancing the digital customer experience.
“We have also restarted many of the in-store investments that were paused at the outset of the pandemic,” Menear said “As customers engaged with Home Depot, we see a continued blend of both the physical and digital worlds. As a result, we believe that these distinct competitive advantages and overarching benefits of an interconnected One Home Depot strategy have never been more relevant.
Home Depot reported its average ticket size increased 10.8% during the fourth quarter. Inflation from core commodity categories positively impacted average ticket growth at Home Depot by approximately 220 basis points. Big ticket comp transactions--defined as transactions over $1,000--increased 23% during the fourth quarter, aided by strong performances across big-ticket categories, including appliances, vinyl plank flooring, and vanities. The retailer said it experienced double-digit growth from both pro and DIY customers, with DIY sales again outpacing pro sales.
“While the operating environment is still recovering for many of our larger pro customers, we’re encouraged by what we’re seeing and hearing as backlogs are growing,” Decker said.
