Home Depot earnings slip despite coronavirus sales boom
Home Depot’s first-quarter profits slipped as coronavirus-related costs dampened a significant jump in sales, the company said Tuesday.
The hardware store chain’s quarterly net earnings dropped 10.7 percent from the prior-year period to roughly $2.2 billion, or $2.08 per share, falling short of Wall Street’s expectations for $2.25 a share, according to Bloomberg data.
Home Depot’s stock price dropped 1.3 percent on the news to $241.50 in premarket trading as of 8:46 a.m. Tuesday.
The miss came as Home Depot’s sales surged 7.1 percent to $28.3 billion in the three months ending May 3. The spike was offset by about $850 million in pre-tax expenses the company took on to support the staff keeping its stores running during the coronavirus crisis.
That includes the cost of expanding paid time off, providing weekly bonuses to hourly workers, doubling overtime pay, extending dependent care benefits, and giving extra time off to workers at a higher risk of contracting the deadly virus, Home Depot said. The Atlanta-based company has nearly 2,300 stores and more than 400,000 employees.
“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,” Home Depot CEO Craig Menear said in a statement.
While Home Depot stores have remained open amid lockdowns aimed at curbing the coronavirus, the company’s efforts to limit customer traffic affected sales in many markets, according to Menear.
The chain has also canceled promotional events that would normally drive shoppers to stores and closed locations early to allow more time for sanitizing and re-stocking, it said.
“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,” Menear said.
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