Home Depot on Tuesday said sales grew 11% in the fiscal fourth quarter and it projected growth in 2022, as contractors bought lumber, electrical equipment, and other supplies for projects.
Sales growth will likely slow this year for Home Depot Inc., the home-improvement retailer said Tuesday. An indication that the sector’s rapid expansion during the Covid-19 pandemic is moderating.
Over the last two years, homeowners have been pouring more money into household projects. A trend amplified by a strong housing market and government stimulus. Now, following a stretch of double-digit growth, sales are more likely to rise only slightly in 2022, Home Depot forecast.
Shares closed Tuesday at $316.17, down 8.9%. It was the stock’s largest daily percent decrease since the first days of the coronavirus crisis in March 2020. It was also the largest percentage drop in the S&P 500 on Tuesday.
Financial Highlights
During the quarter, net earnings jumped 21.1% year-over-year to $3.21 per share and surpassed analysts’ expectations of $3.18 per share. Similarly, revenues increased 10.7% year-on-year to $35.7 billion, topping the Street’s estimate of $34.9 billion.
Comparable sales were up 8.1%, and comparable sales in the U.S. surged 7.6%. Though customer transactions declined 3.4% in the fourth quarter, the average purchase ticket size increased 12.4% to $85.11 from $75.69 in the year-ago period.
Net earnings for the fourth quarter of fiscal 2021 were $3.4 billion, or $3.21 per diluted share, compared with net earnings of $2.9 billion, or $2.65 per diluted share, in the same period of fiscal 2020. For the fourth quarter of fiscal 2021, diluted earnings per share increased 21.1 percent from the same period in the prior year.
For the Fiscal Year 2021, the company reported net earnings of $15.53 per share, up 30.1% from the previous year. Also, sales rose 14.4% year-over-year to $151.2 billion.
Dividend Declaration
The Company today announced that its board of directors approved a 15 percent increase in its quarterly dividend to $1.90 per share. Which equates to an annual dividend of $7.60 per share.
The dividend is payable on March 24, 2022, to shareholders of record on the close of business on March 10, 2022. This is the 140th consecutive quarter the Company has paid a cash dividend.
Sales Growth
Sales growth was sharper among home professionals rather than do-it-yourself customers in the three months, Decker said on the earnings call. Big-ticket transactions, which are those over $1,000, were up about 18% compared with the year-ago period, he said.
In the fourth quarter, Home Depot’s comparable sales figure, which adjusts for store openings and closings, increased by 8.1%. That trend, though flatter than the company’s growth earlier in the pandemics. It shows Home Depot is still building on gains stemming from a flood of home-improvement activity.
The number of transactions declined by 3.8% on a comparable basis, but the average transaction value was up 12%. Inflation in several product categories was responsible for much of that gain, Home Depot’s chief operating officer, Ted Decker, told analysts on a conference call.
Between mid-2020 and mid-2021, the retailer posted four straight quarters of comparable sales growth above 20%. It was fueled by consumers’ surging demand for home-improvement goods as the public-health crisis’s social disruptions left people spending more time in their houses.
What’s next
To drive higher sales, executives said Home Depot will focus on making it easier for do-it-yourself shoppers to get personalized recommendations and find items online and in-store aisles. The company also wants to become a place. Where home professionals buy a larger share of planned purchases for jobs instead of using stores for mostly unplanned or last-minute items.
The company has spent $1.2 billion on supply chain investments. It includes building a network of flatbed distribution centers that can handle the much bigger orders made by pros and deliver them directly to a construction site.
The company will have a new CEO soon. On March 1, Decker will succeed Craig Menear, who will continue to serve as chair of the board.
