November 24, 2020

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Home Improvement

Home Depot Shares Drop as Sales Growth Provokes Cost Increase

(Bloomberg) — Home Depot Inc. shares declined after the Atlanta-based home-improvement retailer reported higher costs and a plan to spend $1 billion to boost annual compensation for front-line hourly employees.



a person standing in front of a building: A customer wearing a protective mask walks past paints for sale at a Home Depot Inc. store in Daly City, California, U.S., on Monday, Nov. 16, 2020. Home Depot Inc. is scheduled to release earnings figures on November 17.


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A customer wearing a protective mask walks past paints for sale at a Home Depot Inc. store in Daly City, California, U.S., on Monday, Nov. 16, 2020. Home Depot Inc. is scheduled to release earnings figures on November 17.

While same-store revenue, a key gauge of performance for retailers, rose 24% in the quarter ended Nov. 1, that also brought higher expenses. Cost of sales, a measure of the company’s expenses to generate a sale, was up 24% from a year ago.

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Home Depot has broadly benefited amid the pandemic of 2020 as consumers divert spending that would have gone to travel and entertainment to improving their homes. With construction booming, it announced on Monday it would buy building products distributor HD Supply Holdings Inc., reuniting the two companies after they split apart more than a decade ago. Investors will listen for additional details in the company’s upcoming call with analysts on Tuesday morning.

Home Depot shares fell 2.7% in pre-market trading Tuesday. The retailer’s shares have risen 28% this year through Monday’s close, outpacing the S&P 500 Index.

In order to prevent crowds from accumulating during the pandemic, the home-improvement retailer started offering its Black Friday sales earlier this year and has pushed them online as well.

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©2020 Bloomberg L.P.

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