10-KPeriod: FY2019

HOME DEPOT, INC. Annual Report, Year Ended Feb 3, 2019

Filed March 28, 2019For Securities:HD

Summary

The Home Depot, Inc. (HD) reported strong financial performance for the fiscal year ended February 2, 2019, with net sales reaching $108.2 billion. This growth was driven by a 5.2% increase in comparable sales, supported by both higher average ticket prices and an increase in customer transactions. Net earnings were $11.1 billion, or $9.73 per diluted share, significantly boosted by a lower effective tax rate due to the Tax Cuts and Jobs Act of 2017. The company continues to invest heavily in its "One Home Depot" strategy, aiming for a seamless customer experience across all channels. Significant investments are being made in store enhancements, digital platforms, and supply chain modernization. The company demonstrated a strong commitment to shareholder returns, repurchasing approximately $10.0 billion in common stock and increasing its quarterly dividend, signaling confidence in its future performance and ability to generate substantial free cash flow.

Financial Highlights

50 data points
Beta

Revenue

$108.20B

34.3% Gross Margin

Net Income

$11.12B

10.3% Net Margin

EPS (Diluted)

$9.73

Total Assets

$44.00B

Cash & Equivalents

$1.78B

Free Cash Flow

$13.16B

Financial Statements
Beta
Revenue$108.20B
Cost of Revenue$71.04B
Gross Profit$37.16B
SG&A Expenses$19.51B
Operating Expenses$21.63B
Operating Income$15.53B
Interest Expense$1.05B
Net Income$11.12B
EPS (Basic)$9.78
EPS (Diluted)$9.73
Shares Outstanding (Basic)1.14B
Shares Outstanding (Diluted)1.14B

Key Highlights

  • 1Net sales increased by 7.2% to $108.2 billion in fiscal 2018, benefiting from a 53rd week and strong comparable sales growth of 5.2%.
  • 2Net earnings rose to $11.1 billion, or $9.73 per diluted share, with a significant reduction in the effective tax rate to 23.6% from 37.0% in the prior year, largely due to the Tax Cuts and Jobs Act.
  • 3Online sales experienced robust growth, increasing by 26.2% and representing 7.9% of total net sales.
  • 4The company returned substantial value to shareholders through $10.0 billion in share repurchases and $4.7 billion in cash dividends.
  • 5The "One Home Depot" strategy, focusing on an interconnected customer experience across stores and online, is a key driver of investments and operational improvements.
  • 6The company maintained a high Return on Invested Capital (ROIC) of 44.8%.

Frequently Asked Questions

Home Depot's primary strategy is to create a seamless and frictionless "One Home Depot" experience for customers across all channels (stores and online). This involves investing in store enhancements, improving the digital experience, modernizing the supply chain, and connecting products and services more effectively to customer needs.

The Tax Cuts and Jobs Act of 2017 significantly lowered the U.S. corporate income tax rate, which resulted in a substantial decrease in Home Depot's effective tax rate to 23.6% for fiscal 2018, down from 37.0% in fiscal 2017. This reduction contributed positively to net earnings and earnings per share.

Home Depot prioritizes investing in its business for growth. After reinvestment, it returns capital to shareholders through a target dividend payout of approximately 55% of prior year earnings per share, with the goal of annual increases, and through share repurchases, conducted as long as they are value-creating.

The company is experiencing strong growth in its online channels, with online sales increasing by 26.2% in fiscal 2018 and representing 7.9% of total net sales. This growth is a key component of their "One Home Depot" strategy, emphasizing an interconnected shopping experience.