Home Depot Leans On ‘Spring Black Friday’ Deals During Busiest Season

by Trefis Team
+3.77%
Upside
78.52
Market
81.48
Trefis
HD
Home Depot
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Home Depot (NYSE:HD) has jumped in early with its annual Spring Black Friday deals late last month, in a rush to beat competition by quickly cashing in on the growing spring season demand – the busiest selling season for home improvement retailers. The retailer, which is not so bullish on the housing recovery in 2012, plans to rely on further strengthening its seasonal sales, basic maintenance, repair and remodeling needs of its 130 million aging homes customer base over the next few quarters. The stock price has already gained 50% over the last six months on better-than-expected earnings and improved housing sentiment. It expects sales growth of approximately 4% in fiscal 2012 with moderate gross margin expansion and operating margin improvements by up to 50 basis points. Its largest competitor is Lowe’s (NYSE:LOW).

Our complete analysis for Home Depot’s stock

With a warmer winter and early spring, home improvement retailers are rushing to quickly capture the spring seasonal demand. Spring is one of the busiest selling seasons for home improvement retailers with strong demand for outdoor products, maintenance and repair, as homeowners take up home improvement projects that were put off during the winter. According to Global Hunter Securities, retail sales for lawn and garden home improvement companies increased 13% in January and 18% in February (y/y).

Prompted by an early spring this year, Home Depot rolled out its national-wide Spring Black Friday deals by the end of March. Usually, these deals arrive at different times in different markets. Lowe’s is preparing deals that should follow soon. Home Depot has built its inventory with lawn care products, outdoor power, fertilizers and gardening products, grills and patio furniture and has hired more than 70K temporary employees to have a head-start in tapping the surge in spring demand.

We have a Trefis price estimate of $49.36 for Home Depot’s stock, slightly below the current market price.

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