Home Depot (HD) 4Q17 Results: Beats on Earnings and Comps, Boosted by Hurricane-Related Sales; Raises FY18 Guidance

KEY POINTS

  • Home Depot reported 4Q17 adjusted EPS of $1.69, up from $1.44 in the year-ago quarter and beating the $1.62 consensus estimate. Total revenues were $23.9 billion, beating the consensus estimate of $23.7 billion.
  • Total comps rose by 7.5% during the quarter, beating the 6.5% consensus estimate. Comps for US stores were up 7.2%. Comp growth was driven by a 5.5% increase in average ticket spend and a 1.9% increase in customer transactions.
  • Home Depot raised its FY18 guidance. The company now expects revenue growth of 6.5% year over year, versus 6.3% previously, and comp growth of 5.0%.

Home Depot (HD) 4Q174Q17 Results

Home Depot reported 4Q17 adjusted EPS of $1.69, up from $1.44 in the year-ago quarter and beating the $1.62 consensus estimate. Total revenues were $23.9 billion, beating the consensus estimate of $23.7 billion. Big-ticket sales—or transactions over $900, which represented 22% of Home Depot’s US sales—were up 9.8%, driven by strength in appliances, flooring and fencing. The online business reported sales growth of 21% for the quarter and online sales accounted for 6.7% of total sales. More than 46% of the company’s online orders in the US are picked up in-store.

Comps rose by 7.5% during the quarter, beating the 6.5% consensus estimate. Comps for US stores were up 7.2%. Comp growth was driven by a 5.5% increase in average ticket spend and a 1.9% increase in customer transactions. Commodity price inflation in lumber, building materials and copper positively impacted average ticket growth by 105 basis points. The Pro and DIY categories grew at healthy rates in the quarter, with Pro sales outpacing DIY sales.

The company estimates that hurricane-related sales positively impacted comparable store sales growth by 1.7%, or approximately $380 million. In 4Q17, the company’s gross margin declined by 12 basis points year over year, to 33.9%, due to lower-margin hurricane-related sales.

Sales per square foot rose by 6.7% compared with the year-ago quarter, reaching $417.

FY17 Results

Home Depot reported total sales of $100.9 billion for fiscal year 2017, up 6.7% year over year. Total comps grew by 6.8% for the full year and US comps grew by 6.9%. The company reported EPS of $7.29 versus $6.45 in FY16, up 13% year over year.

FY18 Outlook

Home Depot raised its FY18 guidance. The company now expects revenues to increase by 6.5% over the full year, versus the 6.3% previously. The company now expects full-year comp growth of 5.0% and a gross margin of 34%. The 53rd week of the year is projected to add about $1.6 billion to total sales. The company is planning on opening three new stores during FY18.