A customer wearing a protective mask loads a wood load at a Home Depot store in Pleasanton, California, on Monday, February 22, 2021.
David Paul Morris | Bloomberg | beautiful pictures
Home DepotThe next CEO of Ted Decker said he wanted home professionals to think of the company as more than just a convenience store.
Retailers want to land larger, planned orders from contractors, such as thousands of feet of floor space – not just last-minute purchases as they scramble to find a tool or complete a job. job. That shift is part of Home Depot’s growth strategy as it tries to stay momentum through the pandemic and hit $200 billion in annual sales.
Decker, the company’s chief executive officer, said: “We’re in the 7-Eleven category because of our strengths – convenience, value, great products and brands – but what we’re building now is something completely different and revolutionary to have a professional purchasing plan,” said Decker, the company’s chief executive officer, Tuesday on the company’s earnings call.
Home Depot reported Tuesday that Sales increased 11% in the fourth fiscal quarter compared with the same period last year. The retailer offered a cautious outlook for the upcoming financial year, with “slightly positive” sales trends and low-single-digit earnings per share growth.
Home Depot executives did not say when the retailer expects to hit that $200 billion goal, but it would mark a nearly $50 billion take in annual sales for the fiscal year. main 2021.
Pandemic-induced home improvement projects have lifted Home Depot sales by more than $40 billion over the past two years. This is roughly equal to Home Depot’s total sales growth from 2009 to 2018.
About half of Home Depot’s total sales come from home professionals, said Chief Financial Officer Richard McPhail. He estimates according to the company’s earnings report that the total retail addressable market in North America is more than $900 billion.
Its competitors, Lowe’s, is also trying to pursue more reliable and profitable professional clients. Previously, it had a smaller percentage of professionals, with almost 75% to 80% of its business coming from self-employed clients.
Over the past few years, Home Depot has invested in supply chain hubs to help it better serve professionals. It is in the midst of a five-year plan to invest $1.2 billion in its supply chain, which includes building large facilities, known as flat distribution centers, that can store and deliver larger orders. It built its first facility in Dallas and is opening a total of 40 stores across major US markets. It previously fulfilled orders from out-of-store professionals.
Decker says the giant hubs have allowed Home Depot to ship a wider variety of goods and give professionals more assurance that they can get the quantity they need. For example, a store might once have only about 3,000 square feet of floor space, he said, enough for three odd jobs.
With apartment distribution centers, he said, Home Depot is receiving orders for 7,000 square feet of floors and 150 doors.
Scot Ciccarelli, a retail analyst at Truist Securities, said Home Depot wants to change the thought process for professionals.
In the past, a professional could run to a Home Depot when a saw blade broke.
“Now, what if they could actually start to convince that contractor, ‘Don’t just get your broken saw blade here. Why don’t you get the door and the workshop here?’ ” he said. “If you can do a big project for multiple families and you can start to gain traction from there, that’s going to be a big deal.”
