(Reuters) – Home Depot Inc said on Tuesday it will spend about $1 billion more on employees’ compensation annually as the home improvement chain benefits from a sustained surge in demand for tools, paint and building materials due to the COVID-19 pandemic.
With limited options for travel or leisure activities, Americans are spending more time at home and using their discretionary income on minor home remodeling and repair work, since the lockdowns started in March.
“Despite elevated activity for most of 2020, (the home improvement) trend shows no sign of weakening and, if anything, is intensifying as we come into the winter months as consumers will be forced to stay inside more,” said Neil Saunders, managing director of GlobalData Retail.
The elevated activity has, however, also led Home Depot to spend more on its staff working through the health crisis, by providing temporary weekly bonuses and more hours of paid time off. The company said on Tuesday it will change some of those programs to permanent forms of additional compensation for frontline hourly employees.
Home Depot’s blue-chip stock, which has risen over 28% this year, fell 1.8% in premarket trading, despite the company beating quarterly sales and profit estimates.
The company, which on Monday said it would buy HD Supply Holdings Inc in a deal valued at about $8 billion, posted a 24.1% rise in same-store sales for the third quarter ended Nov. 1, beating analysts’ average estimate of a 14.8% increase.
Net earnings surged 23.9% to $3.43 billion, or $3.18 per share. Analysts had expected a profit of $3.06 per share, according to IBES data from Refinitiv.
Overall net sales jumped 23.2% to $33.54 billion, beating analysts’ average estimate of $32.04 billion.
Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli