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Home Depot Earnings: 5 Blowout Numbers You Might Have Missed

By Demitri Kalogeropoulos - Updated May 24, 2021 at 4:49PM

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Here's how the home improvement giant cashed in on record demand this past quarter.

Home Depot (HD 4.98%) is in the right place at the right time. The retailer has been using its massive scale to keep shelves stocked through soaring demand for home improvement products. Its digital platform, meanwhile, allowed it to seamlessly mix e-commerce fulfillment with in-store shopping so that sales volumes spiked even as customer satisfaction rose in Q1.

That overarching success produced some head-turning operating metrics that investors will want to know. Let's look at a few of the highlights from Home Depot's mid-May earnings update.

Two people paint a room together.

Image source: Getty Images.

1. Customer traffic: up 19%

Home Depot's 30% sales increase returned the company to its industry-leading growth position versus rival Lowe's (LOW 4.03%), and it was mainly driven by a 19% spike in customer traffic. Home Depot handled the biggest challenges from that surge, which revolved around keeping shelves stocked through inventory shortages and shipping bottlenecks. "We leveraged the scale of our supply chain," CEO Craig Menear said in a conference call, "to maintain our in-stock positions." That 30% sales uptick also included a 10% boost in average spending per visit, powered by higher demand for pricier products and services.

2. Lumber prices: up 416%

Executives said this past quarter's record increase in lumber prices accounted for nearly 4 percentage points of Home Depot's 10% average spending boost. As an example, they described how a core lumber product that a year ago would fetch $9.55 today is selling for just under $40. That volatile situation hurt profitability slightly even as it lifted sales.

3. Big-ticket sales: up 50%

Home Depot's biggest gains came from its heavy spenders, which the company classifies as people paying more than $1,000 in a single transaction. That category jumped 50% in Q1. Demand here was strong across the board, but the chain saw outsize growth in lumber, flooring, and installation services. "Growth with both our [professional] and [do-it-yourself] ... groups accelerated during the first quarter," COO Ted Decker said.

4. Return on invested capital: 45%

Home Depot improved on its world-class financial efficiency by boosting its return on invested capital to 45% from 41% a year ago. That win was supported by impressive operating metrics, including soaring sales volumes. Executives amplified those gains by keeping a lid on expenses and by aggressively buying back stock and taking advantage of low interest rates on debt.

5. May sales: up 30%

The good times are rolling into May, with comparable-store sales up 30% on a two-year stacked basis through the first two weeks of the month. Home Depot sees several factors continuing to support booming demand, including cash-rich consumers and a healthy housing market. The chain's shoppers are saying in surveys that they plan to spend aggressively on home improvement projects over the next few months.

Home Depot said it couldn't rely on that information to make a growth forecast and it again declined to issue a 2021 outlook, citing big questions around volatile demand trends, pricing, and the economy. But it's clear that the latest growth results were better than executives imagined when they hinted at roughly flat comps for the full year back in late February. "Clearly, the first-quarter performance was stronger than what we anticipated," Menear said.

Demitri Kalogeropoulos owns shares of Home Depot. The Motley Fool owns shares of and recommends Home Depot. The Motley Fool recommends Lowes. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Home Depot, Inc. Stock Quote
The Home Depot, Inc.
HD
$330.27 (4.98%) $15.66
Lowe's Companies, Inc. Stock Quote
Lowe's Companies, Inc.
LOW
$216.41 (4.03%) $8.38

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