Home Depot Inc. reported a 22% increase in online sales for its third fiscal quarter ended Nov. 3, though it didn’t break out exact figures. However, some of its online investments are taking longer than expected to pay off.
One example CEO Craig Menear cited in a call with analysts transcribed by Seeking Alpha is the home improvement retailer’s portal for professionals. The upgraded business-oriented site has already been rolled out to 135,000 of Home Depot’s most engaged pros, Menear said, but the wider rollout with additional features like personalization is taking longer than originally planned.
These ecommerce investments are part of the $5.4 billion One Home Depot program announced in 2017 that increases the company’s omnichannel performance. The program was expected to deliver one percentage point to total growth for the quarter, but only produced half that because the investments had yet to go into effect, Menear said. Home Depot’s revenue grew 3.4% in total to $27.2 billion from $26.3 billion for the quarter. For the year so far, growth hit 3.3% to $84.4 billion from $81.7 billion.
Menear said he expects Home Depot’s growth will accelerate as its investments roll out , and that coming quarters will make up for the miss this quarter.
Online orders continue to be an omnichannel affair at Home Depot, with more than half of ecommerce purchases picked up in stores. About 1,300 of the company’s 2,287 stores now have lockers where customers can pick up online orders, Menear said on the call.
Home Depot is No. 7 in the Internet Retailer 2019 Top 1000.
In other earnings news:
- Home Depot competitor Lowe’s Cos. Inc. (No. 23) is moving to Google Cloud, which the company said will increase stability, allow for more personalization and make it easier to add SKUs to the site. The hardware chain said the revamping of its web business will slow online growth in the short term. In the upcoming quarter, the company expects same-store sales to grow about 3%, and its web business will contribute almost nothing to that. Lowe’s didn’t break out ecommerce sales, but for the third fiscal quarter ended Nov. 1, revenue was down 0.2% to $17.39 billion from $17.42 billion during the same period last year. Year to date, revenue is up nearly a percent to $56.12 billion from $55.66 billion.
- Department store chain Kohl’s Corp. (No. 24) reported ecommerce growth in the “mid-teens” for the third fiscal quarter ended Nov. 2, according to CEO Michelle Gass on an earnings call transcribed by Seeking Alpha. Increases in sales via mobile devices drove the growth, Gass said, particularly from the Kohl’s app. Also, while women’s apparel underperformed overall, it outperformed expectations online thanks to new brand availability, Gass said.
The department store didn’t break out ecommerce numbers, but said penetration of in-store pickup also increased as Kohl’s decreased pickup times to under one hour for 95% of orders, Gass said. Kohl’s is also shipping more from stores and will stock 135 stores with additional inventory dedicated to fulfilling online orders, up from 10 stores last year.
The retailer’s Amazon returns program is now available at all stores and bringing in younger shoppers than Kohl’s traditionally sees, Gass said. To capitalize on the increased traffic, Kohl’s is experimenting with new offers and new merchandising tactics around the return kiosk ahead of the holiday season, which will be the first time Amazon returns are accepted at all Kohl’s locations. Amazon.com Inc. is No. 1 in the Top 1000.
Revenue overall was flat for the quarter at $4.6 billion, and down 2.0% for the year so far to $13.1 billion from $13.4 billion at this point last year.
- Apparel chain Urban Outfitters Inc. (No. 45) said the threat of tariffs forced it to receive items early from suppliers last quarter, contributing to an 18% jump in its inventory on the books for the third fiscal quarter ended Oct. 31. The increase, by $79.9 million, was part of a disappointing quarter, with flat sales in stores open more than a year in the U.S. company’s flagship chain. Digital sales increased by double digits, but the retailer did not provide exact figures. Revenue from its subscription service Nuuly, launched this summer, topped $2 million. However, the retailer blamed higher logistics costs associated with online orders for the 28.1% decline in net income to $55.7 million from $77.5 million for the same period last year. Overall revenue for the quarter was up 1.4% to $987.5 million from $973.5 million the year before. For the year so far, sales are down 0.4% to $2.81 billion from $2.82 billion at the same point last year.
Bloomberg contributed to this report.Favorite