Comparable Sales To Push Home Depot’s Revenue Growth

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Trefis
HD: Home Depot logo
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Home Depot

Home Depot (NYSE: HD), whose stock is currently trading at around $230, generates its revenue from its Stores operating across the US, Canada, and Mexico. In this note we discuss the historical performance, and expected Total Revenue for FY 2019. You can look at our interactive dashboard analysis ~ Home Depot Revenue: How does Home Depot make money? ~ for more details. In addition, here is more Consumer Discretionary data.

 

Home Depot Business Model:

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What Does Home Depot offer?

  • The Home Depot, Inc. is the world’s largest home improvement retailer based on net sales for fiscal 2018. The company offers their customers a wide assortment of building materials, home improvement products, lawn and garden products, and décor products and provides a number of services, including home improvement installation services and tool and equipment rental.
  • As of the end of fiscal 2018, they had 2,287 The Home Depot stores located throughout the U.S. (including the Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam), Canada, and Mexico.

2 Primary Customer Groups:

  • DIY Customers: These customers are typically home owners who purchase products and complete their own projects and installations. The associates assist these customers both in stores and through online resources and other media designed to provide product and project knowledge. The company also offers a variety of clinics and workshops both to share knowledge and build an emotional connection with the DIY customers.
  • Professional Customers (or “Pros”): These customers are primarily professional renovators/remodelers, general contractors, handymen, property managers, building service contractors, and specialty tradesmen, such as electricians, plumbers, and painters. These customers build, renovate, remodel, repair and maintain residential properties, multifamily properties, hospitality properties and commercial facilities, including education facilities, healthcare facilities, government buildings, and office buildings.

What Are The Alternatives?

  • Major competitors are companies like Lowe’s and other home improvement stores.

What Is The Basis of Competition?

  • The competition is primarily based on customer experience, price, quality, availability, product assortment, and delivery options. It is also based on store location and appearance as well as presentation of merchandise. Further, online and multichannel retailers are increasingly focusing on delivery services, with customers seeking faster, guaranteed delivery times and low-price or free shipping.

 

Home Depot’s Total Revenue has grown by 14.4% between 2016 and 2018, and is expected to grow by 2.9% in 2019

  • The company has seen a steady growth in revenue over the years. It has grown from $94.6 billion in 2016 to $108.2 billion in 2018.
  • The Company’s revenue growth is mainly contributed by the revenue per square foot metric which, in turn, is pushed by growth in Comparable Sales. The metric increased from $399 in 2016 to $456.6 in 2018. Trefis estimates the metric will reach $469.1 by 2019.
  • The square footage per store metric has reduced slightly over the years from 104K square footage per store in 2016 to 103.6K square footage in 2018. Trefis estimates the metric to be 103.5K in 2019.
  • The number of stores metric has increased slightly over the years from about 2,278 stores in 2016 to 2,287 in 2018. Trefis estimates the number of stores to reach 2,292 in 2019.

 

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