For the next four quarters, analysts expect Home Depot (HD) to post revenues of $111.15 billion, which represents 6.6% growth from $104.32 billion in the corresponding four quarters of the previous year. This revenue growth is expected to be driven by the adoption of its new accounting standard and its positive SSSG (same-store sales growth).
Home Depot is focusing on improving its delivery and fulfillment options, product offerings, and technological advancements to drive its sales. In June, the company announced that it would invest $1.2 billion over the next five years to strengthen its supply chain and improve its delivery speed.
The company plans to use these funds to build 170 new distribution facilities across the United States, which would allow it to provide same-day or next-day delivery to 90% of the US population.
After posting its second-quarter earnings, Home Depot’s management raised its 2018 revenue growth guidance to 7.0% from an earlier estimate of 6.7%. This guidance accounts for one extra week of operations in 2018, SSSG of 5.3%, and the addition of three stores during the same period.
For next four quarters, analysts expect Lowe’s Companies (LOW) to post revenues of $72.80 billion, which represents 3.2% growth from $70.51 billion in the corresponding four quarters of the previous year. This revenue growth is expected to be driven by the adoption of a new revenue recognition accounting standard, positive SSSG, and the addition of new stores.
To drive its SSSG, Lowe’s is focusing on rationalizing its store inventory by investing in high-velocity SKUs (stock keeping units), the expansion of the breadth of its product assortments, greater customer engagement, and improvements in the online experience via added functionality to Lowes.com.
Accounting for the closure of Orchard Supply Hardware stores and inventory rationalization initiative, the company’s management has lowered its 2018 revenue growth guidance to 4.5% from its earlier guidance of 5.0%. The company lowered its SSSG guidance for 2018 to 3.0% from its earlier guidance of 3.5%.
Next, we’ll look at the margins of both companies.