During the fiscal second quarter, net sales at Home Depot increased 23.4% on a year-over-year (YOY) basis to $38.1 billion. The home-improvement retailer made several investments to adjust to coronavirus (COVID-19) which helped increase the company’s ability to respond quickly to changes, helping Home Depot achieve “record-breaking sales in the quarter,” according to chairman, CEO, and president Craig Menear. Net earnings in the quarter increased to $4.3 billion, compared to $3.5 billion for the second quarter of 2019.
As a result of COVID-19, Home Depot continued to leverage its digital platforms as means to reach customers and drive sales. Menear said sales leveraging digital platforms in the second quarter increased approximately 100%, and more than 60% of the time customers opted to pick up their online order at the store. Home Depot’s mobile app saw a record number of downloads in the second quarter and the retailer experienced a significant growth in conversion rates across all digital platforms.
“The accelerated growth of our interconnected and digital offerings has given us the opportunity to showcase, in a very condensed timeframe, new capabilities and different ways to engage with The Home Depot that customers may not have been fully aware of,” Menear said on the company’s second quarter earnings call. “The rate at which customers are authenticating with us is also accelerated, which provides us with the unique opportunity to know our customers even better. This is critical as we continue on our journey to offer a deeper level of personalization and further enhance the interconnected shopping experience.”
During the quarter, Home Depot’s ticket and transactions were both up double-digits in the quarter and the retailer saw healthy growth in both its pro and do-it-yourself (DIY) customer categories. For the second consecutive quarter, DIY sales growth outpaced pro sales growth. However, pro customer sales accelerated significantly compared to the first quarter and grew by double-digits on a YOY basis. Home Depot’s definition of pro includes remodelers and builders, as well as maintenance, repair, and operating supply workers.
“Looking deeper into our Pro sales, we saw notable strength with our smaller Pro customer,” executive vice president of merchandising Ted Decker said on the call. “As markets continue to reopen, we see increasing demand from all our pro customer cohorts. We conti We continue to lean into our strategic investments to create a Pro ecosystem that encompasses professional-grade product, exclusive brands, enhanced delivery, credit, digital capabilities, field sales support, HD rental and more. We believe our differentiated ecosystem will continue to drive deeper engagement with our Pro customers.”
Decker said 13 of the company’s 14 merchandising departments posted double-digit comps in the second quarter, led by the lumber department. The kitchen and bath department posted high single-digit comps. The average ticket increased 10.1% in the quarter and comp transactions increased 12.3%, according to Decker. The increase in average ticket was driven by an increase in basket size and customers trading up to new items, according to Decker. Big ticket transactions, or those over $1,000, were up 16% in the quarter. Big-ticket categories, including appliances and patio furniture, saw strong performance in the quarters.
Bill Lennie, Home Depot’s executive vice president of outside sales and service, said pro sales growth was most notable among “low spend” pros. Low spend pros were less impacted by the downturn in the first quarter than high spend pros, according to Lennie, but both cohorts of pro customers rebounded and accelerated activity in the second quarter as homeowners become more comfortable with allowing individuals into their homes.
Prior to disruptions from COVID-19, Home Depot had taken several steps towards developing a pro “ecosystem” in 2019, including onboarding pros on its B2B website, enhancing the interconnected shopping experience for pros, opening flatbed delivery centers to increase next-day delivery capabilities, and cultivating the One Home Depot experience. The retailer is planning to open three distribution centers in Georgia over the next 18 months in an attempt to support the growing demand for flexible delivery and pick-up options for both pro and DIY customers.
