Home Depot nails its numbers, unlike Lowe's
The home improvement retailer's latest report contains all the metrics that explain why it's crushing its rival.
Net income rose 18% to $1.2 billion, or 83 cents per share, compared with $1 billion, or 68 cents per share, a year earlier. Sales rose 7.4% to $19.1 million. More important, U.S. same-store sales, a key retail metric of stores open at least a year, rose 4.8%. Analysts had expected Home Depot to earn profit of 77 cents per share on revenue of $18.68 billion.
The reasons for the company’s success in the quarter are many. First, sales were strong despite colder-than-normal weather in parts of the U.S., which rivals such as Lowe's (LOW) have blamed for their poor performance. Indeed, Lowe's today reported earnings Wednesday morning that were below analysts' expectation. The smaller rival's sales were $13.1 billion, a decline of 0.5% compared with the year-ago period.
An improving economy is also helping Home Depot as consumers become more comfortable undertaking expensive projects around their houses. New home construction spurred by the rebound in the real estate market also benefits Home Depot because it sells supplies to many construction companies. According to Bloomberg, economists expect home sales to have risen in April to their highest level in more than three years.
In fact, Home Depot CEO Frank Blake pointed out during a conference call with analysts that growth in the company's commercial business outpaced that of its consumer unit. Home Depot's e-commerce operation is also growing, with online traffic surging almost 50%.
About the only bad thing that could be said about Home Depot is that its stock is expensive. With a price-to-earnings multiple of 25.53, the valuation is at a five-year high, so investors should feel no urgency to buy the shares now. When the stock pulls back is the time to add them to your portfolios.
The reason it's worth buying is simple: Home Depot underpromises and overdelivers. Last year, it boosted its earnings forecast three times. It seems likely to do that for a fourth time before too long.
Jonathan Berr does not owns shares of the listed stocks. Follow him on Twitter @jdberr.
I personally like the inside of Lowe's stores more than HD. HD seems to be really dark and dingy - Lowe's is much brighter and cleaner. In our area, for plants and garden supplies, Lowe's is better. For lumber and hardware, HD wins. For bathroom fixtures (tubs, toilets, sinks, faucets, etc...), Lowe's has a much better selection. Tools and flooring are pretty much a toss-up, depending on what you want. I've run into very competent employees at both stores, as well as some real idiots. If I'm going for quickcrete or fencing or lumber or basic building materials, I'm going to HD. For finishing stuff and outdoor stuff, Lowe's gets my business. I agree with the previous poster that the HD website is better than Lowe's, especially when it comes to their search function.
I shopped at both last Saturday and the difference in was drastic. At Home Depot I was greeted at the door, and in the departments there were knowledgeable sales people willing to help. Lowe's on the other hand was like a "ghost town". Not only very few customers but help was difficult to find and the selection of merchandise not too good.
I started noticing a big difference at Home Depot stores here in Houston, TX a few years ago when the new CEO increased the number of retail associates on the floor. Prior to this, I did most of my home improvement shopping at Lowe's.
I now drive about 5 miles past Lowe's to reach Home Depot due to their great customer service and much lower prices for most of my home improvement needs.
Lowe's does however have a much better upscale selection of lighting & plumbing fixtures, appliances and has a better garden center, but good luck trying to find someone to help you at a Lowe's store here in Houston, TX.
A few weeks ago I went back to WV. to visit family and while there I worked on a few projects for my 89 yr old grandmother, I made several trips and purchases at the Lowe's in Cross Lanes, WV. and I was shocked at the difference between their Lowe's store and my local Lowe's store in TX.
The Lowe's store in WV. was extremely well organized and there were plenty of knowledgeable, friendly store associates available. I actually found myself walking back across the store to return items to the shelves that I decided not to purchase, at my local store in TX. I would have simply set the items down anywhere.
When I commended the Lowe's manager in WV. about the my outstanding experience at his store, he informed me that his store was chosen for a test market by putting 10 extra associates on the floor between 10:00 A.M. to 2:00 P.M. and between 5:00 P.M. to 9:00 P.M.
If Lowe's rolls this new strategy nationwide, then I may shop there more often.
Home Depot will continue to out perform Lowes due to it's 'brand stickiness". What we mean by this is that Home Depot has made expressions like 'do it yourself' & 'home improvement' synonymous with shopping at their stores. Their marketing is has targeted those of middle & upper middle incomes that might need improvements but do not necessarily have the money to hire a contractor or handyman. We're not talking about full remodels here, just the 'Harvey homeowners' improvements; which anyone, with the right tools can do.
Their stock will continue to improve as we go into the summer months (Hurricane season starts on June 1st.) & I would also have a stake in Georgia Pacific as well. There is going to be much demand for building materials this summer though the beginning of 2014.
The success has gone to Home Depots head and made them dishonest, belligerent, unfriendly, and with no customer service.
I recently had carpet installed by Home Depot and the amount I ended up paying was twice as much as the estimate.
I contracted for the special $97.00 install price and paid an extra $600.00 to have stairs wrapped. When the installer arrived they said they were not going to do the install for the amount Home Depot was paying them for the install. When I contacted the Home Depot store I purchased from, I was treated rudely and they were not going to install the carpet unless I paid an extra $230.00.
There was also half the roll of carpet and pad left over after the install. When I contacted customer service about the overage, they were evasive, would not answer my questions and refused to address the issue. I would not reccommend Home Depot services to anyone.
My experience in the difference in the two is simply this... I walk into Lowes and the sales assistant says how can I help you. When I tell them I am looking for a 3/8th offset hinge they take you to the ailse and say "here are all our hinges" at Home Depot they say here is the hinge do you want stainless or brass?...To me that is a big difference..
Copyright © 2014 Microsoft. All rights reserved.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.