Home Depot’s interconnected strategy

To counter Amazon (AMZN), Home Depot (HD) continues to focus on enhancing its interconnected experience for its customers by investing in both digital initiatives and physical stores. In the last quarter, the company’s online sales grew by 23% year-over-year, while its overall sales grew by 5.7%. Of these online sales, 54% were picked up from Home Depot’s stores depicting the importance of its interconnected strategy.

Home Depot is also expanding its digital platforms to other categories such as HD Home, pool, and workwear. The company is investing in new category experiences where customers can shop for their requirements for the entire project online. Home Depot is also working on adding more professional customers to its B2B website. By the end of the first quarter, the site had 135,000 customers. The company aims to have one million customers on the website by the end of this year.

How Home Depot Is Planning to Drive Sales

Initiatives at the store level

Last year in June, Home Depot’s management had announced it would invest ~$1.2 billion over the next five years to strengthen and improve the efficiency of its supply chain. During the period, the company plans to build 170 distribution facilities that could allow the company to make deliveries in one day to at least 90% of the US population. To attract more professional customers, Home Depot is expanding its assortment to add brands that professional customers look for and also have them in job-lot quantities. Home Depot had rental tool centers at 1,100 of its stores. The company plans to invest in more tools, space, and technology to expand its rental business.

Management’s guidance and outlook

For 2019, Home Depot’s (HD) management expects its revenue to rise by 3.3% compared to 2018, which had 53 weeks of operations. They are also forecasting the company’s SSSG to be at 5.0% on a 52-week basis.

For the same period, analysts expect Home Depot to post revenue of $111.4 billion, which represents a rise of 2.9% from $108.2 billion in 2018. The increase in same-store sales and the net addition of new stores are likely to drive the company’s revenue.

Peer comparisons

During the same period, Lowe’s Companies (LOW) is expected to report revenue of $72.56 billion, which implies a rise of 1.8% from $71.31 billion in 2018.

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