Same-store sales trends in fiscal 2016
Home Depot (HD) is projecting same-store sales growth of 4.1%–4.9% for full-year fiscal 2016. Its rival, Lowe’s (LOW) will declare its third quarter earnings on November 18—a day after Home Depot. It’s expecting comparable same-store sales growth, or comps, of 4.0%–4.5% in fiscal 2016.
Analyzing 1H16 performance
Home Depot’s global comps were 6.1% and 4.2% in 1Q16 and 2Q16, respectively. In 1H16, the company reported positive comps for all of the product categories. In 1H16, the store comps benefited from:
- a higher number of transactions—up 3.4%
- a higher average ticket size—up 1.7%
In contrast, Lowe’s (LOW) reported store comps of 5.2% and 4.3% in 1Q16 and 2Q16, respectively.
US and international performance
Comps have shown greater traction in the US. They came in at 7.1% and 5.7% in 1Q16 and 2Q16, respectively. Higher big-ticket spending on categories like appliances and lawn movers boosted the US comps. This factor would also boost the top line for some of Home Depot’s suppliers like General Electric (GE), Whirlpool (WHR), and Samsung (SNNLF). They’re some of Home Depot’s biggest appliance suppliers.
While Home Depot’s performance in Canada and Mexico has been strong, with both countries showing positive comp trends for several years in a row in constant currency terms, the sales in 1H16 have been affected by currency headwinds.
E-commerce and omni-channel performance
Comps have also benefited from higher e-commerce sales. They rose 26.9% YoY (year-over-year) in 1H16. They accounted for about 5% of the total sales or ~$2.3 billion. A user-friendly online experience, pushing multi-channel programs like Buy Online, BOPUS (Buy Online and Pick Up at the Store), BOSS (Ship to Store), customization options, and better customer service have been key web and omni-channel enablers for the world’s largest home improvement retailer (XRT).
To learn more about the omni-channel drivers affecting Home Depot’s performance and its peers, read Home Improvement and Furnishing Chains Go Multichannel in 2015.