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Home Depot Has Outperformed Lowe’s Revenue Growth in 2018

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Home Depots’ revenue growth

In the first three quarters of 2018, Home Depot (HD) posted revenues of $81.71 billion—6.1% growth from $77.02 billion in the first three quarters of 2017. The revenue growth was driven by the new accounting standard, the addition of new stores, and positive SSSG (same-store sales growth).

The new accounting standard, which was adopted in January, contributed $130 million to the company’s total revenues. By the end of the third quarter, Home Depot operated 2,286 stores—compared to 2,284 stores at the end of 2017.

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During the first three quarters of 2018, Home Depot posted an SSSG of 5.8%. Transaction growth contributed 1.0%, while the average ticket size increased 4.7%. Home Depot’s management credited its ongoing investments in providing its customers with a frictionless and interconnected customer experience and its extensive assortment for the positive SSSG. During the same period, the company’s online sales grew 24.6% year-over-year—7.5% of the company’s total revenues. Home Depot’s SSSG benefited from hurricane-related sales.

Lowe’s revenue growth

In the first three quarters of 2018, Lowe’s (LOW) posted revenues of $55.66 billion—a rise of 4.8% from $53.13 billion in 2017. Adopting the new accounting standard, the positive SSSG, and the acquisition of Maintenance Supply Headquarters contributed to the company’s revenue growth.

During the first three quarters in 2018, Lowe’s posted an SSSG of 2.6% due to 3.8% growth in the average ticket size. The growth was partially offset by a decline of 1.2% in transactions. Adopting the new accounting standard contributed 1.0% of the revenue growth. Lowe’s acquired Maintenance Supply Headquarters in June 2017. The revenues from Maintenance Supply Headquarters also contributed to the company’s revenue growth.

Lowe’s decision to exit some non-core businesses and close underperforming stores caused its store count to decline. By the end of the third quarter, the company operated 2,133 stores—compared to 2,152 stores by the end of 2017.

Next, we’ll discuss Home Depot and Lowe’s EPS in the first three quarters of 2018.

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