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What Drove Home Depot’s Revenue in 3Q16?

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Nov. 17 2016, Published 4:18 p.m. ET

3Q16 performance

Home Depot (HD) posted revenue of $23.2 billion in 3Q16, representing a rise of 6.1% from $21.8 billion in 3Q15. Analysts were expecting the company to post revenue of $23.1 billion.

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Revenue growth

Home Depot’s revenue growth was driven by positive same-store sales growth and rising online sales. All three divisions of Home Depot in the United States posted positive same-store sales growth, with its southern division leading. The company’s stores in Mexico and Canada also reported positive same-store sales growth in their respective currencies. The company reported a rise of 17% in its online sales, which formed 5.6% of its total sales.

Same-store sales growth in the appliances, lumber, tools, outdoor and indoor garden, lighting, flooring, and decor businesses were above average. Favorable weather conditions increased the amount of outdoor projects being done. HD’s acquisition of Interline Brands in June 2015 allowed the company to enter the maintenance, repair, and operation business, which is estimated to be a $50 billion business. The company’s management stated that it was testing several use cases, while the integration process of Interline was in progress.

Home Depot’s revenue growth was negatively impacted by the strengthening US dollar, which lowered revenue from Mexico. This change negatively impacted the company’s revenue growth by 0.35%.

Outlook

In next four quarters, analysts expect Home Depot to post revenue of $97.2 billion, representing a rise of 4% over the corresponding quarters of the previous year.

Next, let’s look at what drove Home Depot’s same-store sales growth in 3Q16.

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