Source: Company reports/Fung Global Retail & Technology

4Q16 Results

Home Depot reported total revenues of $22.21 billion for 4Q16, up 5.8% from the year-ago quarter. Foreign currency effects, primarily in the form of a weaker Mexican peso, negatively impacted total sales by about $96 million, or 0.5%. Sales per square foot rose by 5.7% compared with the year-ago quarter. The online business reported sales growth of 19% for the quarter. Big-ticket sales—or transactions over $900, which represent 20% of Home Depot’s US sales—were up 11.6%. The increase in big-ticket purchases was driven by flooring, appliances and several Pro categories. The company reported EPS of $1.44, beating the consensus estimate of $1.33 and up 23.1% from the year-ago quarter.

Same-Store Sales Breakdown for the Quarter

Same-store sales were up 5.8%, beating the 3.7% consensus estimate. Comps for US stores were up 6.3%. By month, comps were strongest in December (at 7.1%), followed by November (at 5.7%) and then January (at 4.7%). Internationally, Mexico and Canada posted positive comps in local currency for the quarter. Total comps were driven by a 2.9% increase in both transactions and average ticket. Commodity price inflation positively impacted average ticket growth by approximately 32 basis points, while the weaker Mexican peso negatively impacted ticket growth by approximately 45 basis points. All merchandising departments posted positive comps, led by flooring and tools, which posted double-digit comps in the quarter. Lumber, outdoor garden, appliances, decor, indoor garden, lighting and plumbing all posted comps that were above the company’s averages. Pro sales comps grew faster than the company’s overall comps. Pro-heavy categories such as fencing, decking, commercial and industrial lighting, and electrical wiring also saw strong comps.

FY16 Results

For FY16, Home Depot’s revenues rose by 6.9%, to $94.6 billion, and total company comps were up 5.6% year over year. The company had guided for a sales increase of 6.3% and comp growth of 4.9%. A stronger US dollar negatively impacted sales by about $549 million, or 0.6%. Total sales per square foot increased by 5.5%, to $391, which was the highest sales per square foot recorded by the company since 2001. Home Depot reported full-year EPS of $6.45, up 18.1% from $5.46 the previous year and above prior guidance of $6.33.

FY17 Outlook

Home Depot expects total revenue of about $23.23 billion for FY17, an increase of approximately 4.6%. The company also expects same-store sales to increase by 4.6%. The consensus estimate calls for sales growth of 4.1% and same-store sales growth of 4.6%. The company expects FY17 EPS of $7.13, up 10.5% from FY16 but below the consensus estimate of $7.17.