What Drove Home Depot’s Same-Store Sales Growth in 1Q17?



Same-store sales growth

Measured in terms of percentage, same-store sales growth (or SSSG) measures the increase in revenue from a company’s existing stores over a certain period of time. SSSG is driven by ticket size and traffic.

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In 1Q17, Home Depot posted SSSG of 5.5%, with the rise in its traffic contributing 1.5% and the growth in its average ticket size contributing 3.9%. Its ticket sizes were positively impacted by inflation and customers’ opting for newer and more innovative products. Moving on to monthly performance, the company posted SSSG of 5.8% in February, 4.3% in March, and 6.2% in April.

During 1Q17, all the company’s merchandising departments posted positive SSSG, with appliances, lumber, and flooring posting double-digit rises. Categories such as plumbing, décor, tools, electrical, and kitchen and bath posted above average sales, while the building materials, hardware, lighting, millwork, paint, and outdoor garden categories posted positive sales that were below the company’s average SSSG.

HD’s pro business outpaced its DIY (do-it-yourself) sales. The company has also partnered with professionals to connect them with do-it-for-me customers through its pro referral platform. Big-ticket sales also rose 15.8% in the quarter. Transactions above $900 are classified as big tickets. They form more than 20% of the company’s sales.

In temrs of HD’s international business, both Canada and Mexico have posted positive SSSGs in their local currencies in 1Q17. The company claimed that its interconnected retail strategy drove its sales in both countries and received a positive response from customers.

ETF exposure

You can also gain exposure to Home Depot by investing in the SPDR S&P Homebuilders ETF (XHB), which has invested 4.7% in Home Depot. XHB has also invested 4.6%, 4.3%, and 3.9% in Lowe’s (LOW), Williams-Sonoma (WSM), and Bed Bath & Beyond (BBBY), respectively.

Next, we’ll look at what analysts are expecting from HD’s next four quarters’ worth of revenue.


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