Home Depot is top home improvement retailer in North America
Home Depot (HD) is the largest home improvement (XHB) (ITB) retailer in both Mexico and Canada (EWC). Canada sales came in at over seven billion Canadian dollars in fiscal 2016. The retailer (XRT) (XLY) operates 182 stores in Canada and 115 stores in Mexico. In fiscal 2016, Home Depot opened one store in Canada and four in Mexico.
According to Home Depot’s CEO, Craig Menear, both Canada and Mexico performed strongly in the fourth quarter.
- Store comps grew at a double-digit pace in Mexico in local currency terms, the 49th consecutive quarter of comps growth in the country.
- Store comps in Canada grew at a high-single-digit pace in local currency terms, representing the 17th straight quarter of positive comps for the retailer.
Despite the strong showing in its international operations, Home Depot’s sales were affected by the depreciation of the Canadian dollar and the Mexican peso versus the US dollar. The retailer estimates the full-year sales impact of negative currency movements at $1.4 billion, or 1.6%. In the fourth quarter, store comps were negatively affected by $350 million, or 1.8%[1. Based on comments by Carol Tomé, CFO of HD].
Home Depot has grown its presence in both Canada and Mexico via the organic route, as have rivals Pier 1 Imports (PIR), Restoration Hardware (RH), Williams-Sonoma (WSM), and IKEA. With a proven track record of execution, and being the largest player in both markets, Home Depot is counting on organic growth. In fiscal 2017, the retailer plans to open five new stores in Mexico, taking the total to 120 in the country.
In contrast, the world’s number two home improvement retailer, Lowe’s (LOW), recently announced it was acquiring home improvement retailer RONA (RON.TO) in Canada, a transaction that’s likely to provide Lowe’s with the scale and presence to take on its larger rival HD.