Home Depot
It's also a reflection that many see a slowdown in consumer spending due to inflation and no stimulus. Still, Home Depot's underperformance over the past few months is unusual given that it's historically been one of the steadiest and best-performing stocks. It remains more than 100% higher from its March 2020 low but is off by nearly 30% from its all-time highs that it set a couple of months ago.
Inside the Numbers
In Q4, Home Depot reported $3.21 in earnings per share which is slightly higher than expectations of $3.18 per share, a 21.1% increase from last year. Revenue came in above expectations at $35.7 billion vs $34.9 billion, an 11% increase from last year.
It said strength was driven by higher prices, while costs were elevated due to investments in the supply chain, leading to lower gross margins. It is dealing with shortages in certain items due to contractor demand.
Same-store sales increased 8.1%, above expectations of 5%. Transactions over $1,000 increased by 18%. However, the number of transactions declined to 402.5 million from 416.8 million a year ago.
The company said it felt some impact from inflationary pressures and supply chain bottlenecks. It sees this impact continuing in 2022 as it forecast slightly positive sales and low single-digit earnings growth.
Home Depot has thrived along with the housing market. Increasing home prices also mean that people are more likely to renovate their homes. Additionally, spending on housing increased during the pandemic with other outlets for spending unavailable.
Total sales for 2021 reached $151.16 billion, 14% above 2020. The company sees growth initiatives like increased digital sales, improving the shopping experience, and personalized recommendations. It's also spending $1.2 billion on supply chain investments, including flatbed distribution centers that can handle the much bigger orders made by pros and deliver them directly to construction sites.