Stores fulfill 60% of Home Depot’s online orders. Plus, web sales soar 135% at Lowe's, Kohls’ digital sales increase 58% amid a challenging quarter, and Marks & Spencer plans to cut 7,000 jobs.

Sales from The Home Depot Inc.’s digital platforms, which include the home improvement retailer’s app and ecommerce site, increased about 100% in its fiscal second quarter ended Aug. 2 compared with its fiscal Q2 2019, the retail chain reported this week.

Home Depot did not break out ecommerce figures, only that it’s seeing “tremendous growth” and it is “very, very pleased,” CEO Craig Menear told investors on an earnings call according to a SeekingAlpha transcript. Home Depot is No. 5 in the 2020 Digital Commerce 360 Top 1000.

Home Depot’s app and website conversion rates also increased significantly, and its app generated a record number of downloads during the quarter, said Ted Decker, executive vice president, merchandising, without sharing specifics.

“These results confirm our belief that we’ve been making investments in the right areas of our business and that those investments are resonating with our customers,” Decker said.

Consumers, wanting to minimize contact with others during the pandemic, are shopping at fewer physical retailers, and Home Depot is the beneficiary of this consolidation, Decker said. “Our research shows that our customers are increasingly looking to HomeDepot.com to help [find products to complete their projects] like room decor and textiles,” he said.

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“With record levels of traffic on HomeDepot.com, we’ve seen significant outsized sales growth with our HD Home assortment,” he added.

Overall, sales in its fiscal Q2 reached $38.05 billion, a 23.4% year-over-year increase from $30.84 billion. Home Depot points to a 10.1% higher average order value, $74.12, in Q2 2020 compared with $67.31 in Q2 2019, and a 12.3% increase in the number of transactions—511.5 million transactions in Q2 compared with 455.5 million—as reason for the increase. That means shoppers purchased more times from Home Depot in the quarter, and they spent more every time they made a purchase.

Home Depot operates 2,293 stores in North America, which remain open during the coronavirus pandemic. These stores are a boon to its digital sales, as more than 60% of Home Depot’s online orders were picked up at a store during the quarter, Menear said.

In fact, Home Depot had triple-digit growth in each separately for in-store pickup with lockers, buy online/ship-from store with an express car or van delivery, and curbside delivery, Decker said.

Some orders that were shipped to consumers’ homes, however, took longer to arrive because of the surge in online sales causing delivery and fulfillment challenges, Menear said without providing specifics.

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In response, during the quarter the retailer turned one of its “market delivery centers” into a direct-to-consumer fulfillment center to fulfill online orders. It made the transition in a few weeks, which helped speed deliveries, Menear said without revealing more. Home Depot created market delivery centers to extend next-day delivery capabilities to customers for appliances and other products, without increasing store inventory.

Home Depot invested approximately $480 million in additional benefits for associates, including weekly bonuses for hourly associates in stores and distribution centers. Year-to-date, the company has spent approximately $1.3 billion on enhanced pay and benefits in response to COVID-19.

In its fiscal Q2 for the three months ended Aug. 2, Hope Depot reported:

  • $38.05 billion in net sales, a 23.4% increase from $30.84 billion in its fiscal second quarter ended Aug. 4.
  • Net income increased $4.33 billion, a 24.5% increase from $3.48 billion.

For the six months ended Aug. 2, Hope Depot reported:

  • $66.31 billion in net sales a 15.9% increase from $57.22 billion.
  • Net income of $6.58 billion, a 9.8% increase from $5.99 billion.

Web sales soar 135% at Lowe’s

Lowe’s Cos Inc. (No. 22 in the Top 1000) also reported a strong fiscal second quarter 2020 ended July 31, with sales through its website soaring 135% year over year.

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The company has prioritized faster deliveries, and said last week it plans to build up its supply chain to provide more same-day and next-day service offerings and boost its shipping capabilities over the next 18 months.

For the three months ended July 31, Lowe’s reported $27.30 billion in total sales, up 30.1% from $20.99 billion in the year-ago period. For the six months ended July 31, $46.98 billion in total sales, a 21.3% increase from $38.73 billion. Sales were driven by consumers shifting their dollars to home repair and away from other discretionary purchases in other retail categories, the chain reported.

Kohls’ digital sales increase 58% amid challenging quarter

Online sales for retail chain Kohl’s Corp. increased 58% year over year in its fiscal second quarter ended Aug. 1, CEO Michelle Gass told investors this week, according to a SeekingAlpha transcript. Digital sales represented 41% of its net sales for the quarter, up 20% from last year.

Net sales were $3.21 billion in Q2 2020, a 23.0% decrease from $4.17 billion in the year-ago quarter. Net income was $47 million this quarter, compared with $241 million in the year-ago quarter. Kohl’s attributes the decreases in part to its stores operating 25% fewer days than last year due to the pandemic, and to its reopened stores operating limited hours.

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On a positive note, its online home sales increased 90% year over year and online activewear sales increased 70% year over year, the chain reported.

Stores were instrumental to Kohls’ online sales as they fulfilled 50% of its ecommerce sales during the quarter. In total, shoppers picked up 15% of online orders at a store, with half of the 15% picked up in the store and half picked up curbside.

“Our stores are playing a critical role to not only handle the walk-in demand but also to support the very strong digital demand,” Gass said.

As Kohl’s stores reopen, they are continuing to accept Amazon returns. Kohl’s has now moved that service to the back of the store for “greater social distancing and to enhance safety,” Gass said. “We have seen traffic build and remain pleased with the overall performance of the program.”

Kohl’s is No. 21 in the Top 1000.

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Marks & Spencer to cut 7,000 jobs

Marks & Spencer Group Plc (No. 41 in the Digital Commerce 360 Europe 500) plans to cut about 7,000 jobs after its clothing business was hit hard by the coronavirus lockdown, adding to the toll of unemployment in the U.K. retail industry.

The move to eliminate about one-tenth of the store chain’s workforce follows a 39% plunge in the clothing and home arm’s sales in the latest 13 weeks. A 2.5% gain in food sales failed to offset the impact, and uncertainty over the course of the pandemic clouds future prospects, M&S said in a statement.

The benefits of cost-cutting won’t outweigh the negatives for investors until there’s a genuine improvement in the retailer’s clothing and home unit, Peel Hunt analyst Jonathan Pritchard said in a note.

M&S said it expects some of the job cuts to occur through attrition and early retirement and also plans to add an unspecified number of new positions. The largest portion of the cuts will be in the headquarters office. As with other retailers, the company’s online operations have gotten a boost since the lockdowns began.

The retailer said in July that it planned to cut about 950 jobs from a total of 78,000. The new reductions will come on top of those. M&S has previously detailed plans to close about 100 stores by the end of this year and has already shut 56, but the update included no further news on those measures.

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“Importantly, these redundancies are not being driven by a new round of store closures (though we would not be surprised if that, too, were announced in due course), but by reducing staffing levels in the existing store footprint,” Morgan Stanley analysts said in a note. They expect the job cuts to generate annual costs savings of as much as 100 million pounds ($131 million) but say there could be a similarly sized exceptional charge this year to fund the restructuring.

Percentage changes may not align exactly with dollar figures due to rounding.

Bloomberg News contributed to this article.

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