Home Depot (HD, Financial) released its second-quarter results before the opening bell on Aug. 19.
The home improvement retailer reported impressive quarterly results that edged past Wall Street's earnings and revenue projections, driven by double-digit growth in customer transactions, average ticket size and sales per retail square foot during the peak of the Covid-19 pandemic.
By the numbers
Home Depot reported earnings per share of $4.02 in the second quarter, up 26.8% on a year-over-year basis. Analysts had anticipated earnings of $3.71 per share. Revenue of $38.05 billion jumped 23.4% from the same period last year. This was also more than the forecasted $34.53 billion.
Comparable store sales surged 23.4% versus the anticipated growth of 10.5% as the stay-at-home mandates and mounting house prices enticed customers to spend on their home repair projects. U.S. comps were up 25%, aided by a 10.1% increase in average purchases.
Reflecting on the company's performance, Chairman and CEO Craig Menear said:
"The investments we have made across the business have significantly increased our agility, allowing us to respond quickly to changes while continuing to promote a safe operating environment. This enhanced our team's ability to work cross-functionally to better serve our customers and deliver record-breaking sales in the quarter."
Mounting costs
Over the course of the pandemic, the hardware store chain has expanded paid leave for both hourly and non-hourly workers. Moreover, the company reported it provided hazard incentives in the form of doubled overtime pay and weekly bonuses to keep workers from quitting. The company incurred roughly $850 million in pre-tax expenses ($640 million after-tax) associated with the above measures.
For the second quarter, the company spent as much as $480 million on additional benefits for workers. This included weekly bonuses for hourly associates.
Dividend payment
The board of directors announced a quarterly cash dividend of $1.50 per share, which will be payable on Sept. 17. It will mark the 134th successive quarter of the company paying a dividend.
Guidance
The Atlanta-based retailer did not provide an outlook for the remainder of fiscal 2020, citing the global uncertainty caused by the pandemic.
Going forward, the company says that customers are expected to take up indoor as well as outdoor projects in the near term, which could be beneficial for the business.
Disclosure: I do not hold any positions in the stocks mentioned.
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