ATLANTA, May 19, 2020 /PRNewswire/ -- The Home
Depot®, the world's largest home improvement retailer,
today reported sales of $28.3 billion
for the first quarter of fiscal 2020, a 7.1 percent increase from
the first quarter of fiscal 2019. Comparable sales for the first
quarter of fiscal 2020 were positive 6.4 percent, and comparable
sales in the U.S. were positive 7.5 percent.
"As the COVID-19 pandemic evolved, we anchored to the core
values of our Company by focusing on two key priorities: working to
ensure the safety and well-being of our associates and customers,
and providing our customers and communities with essential
products. We took early and decisive action to intentionally
limit customer traffic in our stores which we believe had a
significant impact to sales in many markets," said Craig Menear, chairman, CEO, and president.
"Even with these actions, the robust and flexible interconnected
infrastructure that we have invested in for over a decade allowed
us to quickly adapt to changing customer preferences and achieve
strong sales performance in the quarter."
In support of these two objectives, the Company took several
actions to prioritize safety and enhance associate benefits. To
promote a safe environment for associates and customers, the
Company implemented a number of operational changes in mid-March,
including closing stores earlier to allow more time for sanitation
and replenishing of essential products, limiting customer traffic
in stores, and canceling traffic-driving events such as
Spring Black Friday.
To support its associates during the COVID-19 pandemic, the
Company took the following actions:
- Expanded paid time off for all hourly associates with
additional hours that can be used at their discretion and will be
paid out at year-end if not used;
- Provided additional paid time off for associates who are 65 and
older or deemed to be at higher risk according to CDC
guidelines;
- Provided weekly bonuses for hourly associates in our stores and
distribution centers, and doubled overtime pay; and
- Extended dependent care benefits and waived related
co-pays.
As a result of the actions taken to support our associates, the
Company incurred a total of approximately $850 million of pre-tax expense, or approximately
$640 million after tax, equaling
$0.60 per diluted share.
Net earnings for the first quarter of fiscal 2020 were
$2.2 billion, or $2.08 per diluted share, compared with net
earnings of $2.5 billion, or
$2.27 per diluted share, in the same
period of fiscal 2019. For the first quarter of fiscal 2020,
diluted earnings per share decreased 8.4 percent from the same
period in the prior year.
"I want to thank our associates and express how grateful and
proud I am of the resilience and strength that our teams have
demonstrated as we navigate these extraordinary circumstances
together," said Menear.
Fiscal 2020 Guidance
While sales trends were strong at the end of the first quarter
and into the first two weeks of the second quarter, as a result of
the uncertainty related to the duration of COVID-19 and its impact
on the broader economy, the Company is suspending its previously
communicated fiscal 2020 guidance.
Dividend Declaration
The Company today announced that its board of directors declared
a first quarter cash dividend of $1.50 per share. The dividend is payable on
June 18, 2020, to shareholders of
record on the close of business on June 4,
2020. This is the 133rd consecutive quarter the
Company has paid a cash dividend.
The Home Depot will conduct a conference call today at
9 a.m. ET to discuss information
included in this news release and related matters. The conference
call will be available in its entirety through a webcast and replay
at ir.homedepot.com/events-and-presentations.
At the end of the first quarter, the Company operated a total of
2,293 retail stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. The Company employs more than 400,000
associates. The Home Depot's stock is traded on the New York Stock
Exchange (NYSE: HD) and is included in the Dow Jones industrial
average and Standard & Poor's 500 index.
Certain statements contained herein constitute
"forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may
relate to, among other things, the impact on our business,
operations and financial results of the COVID-19 pandemic (which,
among other things, may affect many of the items listed below); the
demand for our products and services; net sales growth; comparable
sales; effects of competition; implementation of store,
interconnected retail, supply chain and technology initiatives;
inventory and in-stock positions; state of the economy; state of
the housing and home improvement markets; state of the credit
markets, including mortgages, home equity loans and consumer
credit; impact of tariffs; issues related to the payment methods we
accept; demand for credit offerings; management of relationships
with our associates, suppliers and vendors; international trade
disputes, natural disasters, public health issues (including
pandemics and related quarantines, shelter-in-place orders,
and similar restrictions), and other business interruptions
that could disrupt supply or delivery of, or demand for, the
Company's products or services; continuation of share repurchase
programs; net earnings performance; earnings per share; dividend
targets; capital allocation and expenditures; liquidity; return on
invested capital; expense leverage; stock-based compensation
expense; commodity price inflation and deflation; the ability to
issue debt on terms and at rates acceptable to us; the impact and
expected outcome of investigations, inquiries, claims and
litigation; the effect of accounting charges; the effect of
adopting certain accounting standards; the impact of regulatory
changes; store openings and closures; guidance for fiscal 2020 and
beyond; financial outlook; and the integration of acquired
companies into our organization and the ability to recognize the
anticipated synergies and benefits of those acquisitions.
Forward-looking statements are based on currently available
information and our current assumptions, expectations and
projections about future events. You should not rely on our
forward-looking statements. These statements are not guarantees of
future performance and are subject to future events, risks and
uncertainties – many of which are beyond our control, dependent on
the actions of third parties, or are currently unknown to us – as
well as potentially inaccurate assumptions that could cause actual
results to differ materially from our expectations and projections.
These risks and uncertainties include, but are not limited to,
those described in Item 1A, "Risk Factors," and elsewhere in our
Annual Report on Form 10-K for our fiscal year ended February 2, 2020 and in our subsequent Quarterly
Reports on Form 10-Q.
Forward-looking statements speak only as of the date they are
made, and we do not undertake to update these statements other than
as required by law. You are advised, however, to review any further
disclosures we make on related subjects in our periodic filings
with the Securities and Exchange Commission.
THE HOME DEPOT,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
in millions,
except per share data
|
May 3,
2020
|
|
May 5,
2019
|
|
% Change
|
Net sales
|
$
|
28,260
|
|
|
$
|
26,381
|
|
|
7.1
|
%
|
Cost of
sales
|
18,635
|
|
|
17,364
|
|
|
7.3
|
|
Gross
profit
|
9,625
|
|
|
9,017
|
|
|
6.7
|
|
Operating
expenses:
|
|
|
|
|
|
Selling, general and
administrative
|
5,829
|
|
|
4,940
|
|
|
18.0
|
|
Depreciation and
amortization
|
520
|
|
|
480
|
|
|
8.3
|
|
Total operating
expenses
|
6,349
|
|
|
5,420
|
|
|
17.1
|
|
Operating
income
|
3,276
|
|
|
3,597
|
|
|
(8.9)
|
|
Interest and other
(income) expense:
|
|
|
|
|
|
Interest and
investment income
|
(17)
|
|
|
(15)
|
|
|
13.3
|
|
Interest
expense
|
324
|
|
|
288
|
|
|
12.5
|
|
Interest and
other, net
|
307
|
|
|
273
|
|
|
12.5
|
|
Earnings before
provision for income taxes
|
2,969
|
|
|
3,324
|
|
|
(10.7)
|
|
Provision for income
taxes
|
724
|
|
|
811
|
|
|
(10.7)
|
|
Net
earnings
|
$
|
2,245
|
|
|
$
|
2,513
|
|
|
(10.7)
|
%
|
|
|
|
|
|
|
Basic weighted
average common shares
|
1,073
|
|
|
1,101
|
|
|
(2.5)
|
%
|
Basic earnings per
share
|
$
|
2.09
|
|
|
$
|
2.28
|
|
|
(8.3)
|
|
|
|
|
|
|
|
Diluted weighted
average common shares
|
1,077
|
|
|
1,106
|
|
|
(2.6)
|
%
|
Diluted earnings per
share
|
$
|
2.08
|
|
|
$
|
2.27
|
|
|
(8.4)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Selected Sales
Data (1)
|
May 3,
2020
|
|
May 5,
2019
|
|
% Change
|
Customer transactions
(in millions)
|
374.8
|
|
|
390.0
|
|
|
(3.9)
|
%
|
Average
ticket
|
$
|
74.70
|
|
|
$
|
67.31
|
|
|
11.0
|
|
Sales per retail
square foot
|
$
|
466.58
|
|
|
$
|
435.18
|
|
|
7.2
|
|
—————
|
(1) Selected Sales Data
does not include results for the legacy Interline Brands business,
now operating as a part of The Home Depot Pro.
|
THE HOME DEPOT,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
|
in
millions
|
May 3,
2020
|
|
May 5,
2019
|
|
February
2,
2020
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
8,696
|
|
|
$
|
1,882
|
|
|
$
|
2,133
|
|
Receivables,
net
|
2,610
|
|
|
2,317
|
|
|
2,106
|
|
Merchandise
inventories
|
14,989
|
|
|
15,495
|
|
|
14,531
|
|
Other current
assets
|
982
|
|
|
859
|
|
|
1,040
|
|
Total current
assets
|
27,277
|
|
|
20,553
|
|
|
19,810
|
|
Net property and
equipment
|
22,697
|
|
|
22,270
|
|
|
22,770
|
|
Operating lease
right-of-use assets
|
5,634
|
|
|
5,629
|
|
|
5,595
|
|
Goodwill
|
2,220
|
|
|
2,250
|
|
|
2,254
|
|
Other
assets
|
909
|
|
|
813
|
|
|
807
|
|
Total
assets
|
$
|
58,737
|
|
|
$
|
51,515
|
|
|
$
|
51,236
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Short-term
debt
|
$
|
—
|
|
|
$
|
372
|
|
|
$
|
974
|
|
Accounts
payable
|
10,056
|
|
|
10,311
|
|
|
7,787
|
|
Accrued salaries and
related expenses
|
1,974
|
|
|
1,418
|
|
|
1,494
|
|
Current installments
of long-term debt
|
4,200
|
|
|
1,084
|
|
|
1,839
|
|
Current operating
lease liabilities
|
853
|
|
|
793
|
|
|
828
|
|
Other current
liabilities
|
6,265
|
|
|
5,695
|
|
|
5,453
|
|
Total current
liabilities
|
23,348
|
|
|
19,673
|
|
|
18,375
|
|
Long-term debt,
excluding current installments
|
31,622
|
|
|
26,804
|
|
|
28,670
|
|
Long-term operating
lease liabilities
|
5,075
|
|
|
5,145
|
|
|
5,066
|
|
Other
liabilities
|
2,182
|
|
|
2,036
|
|
|
2,241
|
|
Total
liabilities
|
62,227
|
|
|
53,658
|
|
|
54,352
|
|
Total stockholders'
(deficit) equity
|
(3,490)
|
|
|
(2,143)
|
|
|
(3,116)
|
|
Total liabilities and
stockholders' equity
|
$
|
58,737
|
|
|
$
|
51,515
|
|
|
$
|
51,236
|
|
THE HOME DEPOT,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Three Months
Ended
|
in
millions
|
May 3,
2020
|
|
May 5,
2019
|
Cash Flows from
Operating Activities:
|
|
|
|
Net
earnings
|
$
|
2,245
|
|
|
$
|
2,513
|
|
Reconciliation of net
earnings to net cash provided by operating activities:
|
|
|
|
Depreciation and
amortization
|
607
|
|
|
547
|
|
Stock-based
compensation expense
|
88
|
|
|
86
|
|
Changes in working
capital
|
2,834
|
|
|
1,471
|
|
Changes in deferred
income taxes
|
(68)
|
|
|
5
|
|
Other operating
activities
|
31
|
|
|
91
|
|
Net cash
provided by operating activities
|
5,737
|
|
|
4,713
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Capital
expenditures
|
(586)
|
|
|
(681)
|
|
Proceeds from sales
of property and equipment
|
8
|
|
|
6
|
|
Other investing
activities
|
—
|
|
|
(13)
|
|
Net cash used
in investing activities
|
(578)
|
|
|
(688)
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
Repayments of
short-term debt, net
|
(974)
|
|
|
(967)
|
|
Proceeds from
long-term debt, net of discounts and premiums
|
4,960
|
|
|
—
|
|
Repayments of
long-term debt
|
(27)
|
|
|
(15)
|
|
Repurchases of common
stock
|
(791)
|
|
|
(1,368)
|
|
Proceeds from sales
of common stock
|
18
|
|
|
34
|
|
Cash
dividends
|
(1,611)
|
|
|
(1,499)
|
|
Other financing
activities
|
(125)
|
|
|
(98)
|
|
Net cash
provided by (used in) financing activities
|
1,450
|
|
|
(3,913)
|
|
Change in cash and
cash equivalents
|
6,609
|
|
|
112
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(46)
|
|
|
(8)
|
|
Cash and cash
equivalents at beginning of period
|
2,133
|
|
|
1,778
|
|
Cash and cash
equivalents at end of period
|
$
|
8,696
|
|
|
$
|
1,882
|
|
—————
|
Note: Effective
February 3, 2020, we reclassified cash flows relating to book
overdrafts from financing to operating activities for all periods
presented on the Consolidated Statement of Cash Flows. The amounts
of these reclassifications were not material.
|
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SOURCE The Home Depot