01—Abstract
Summary
Summary of the 10-K filed March 28, 2019. Cited figures are marked; the original filing is the authoritative source.
The Home Depot, Inc. (HD) reported strong financial performance for the fiscal year ended February 2, 2019, with net sales reaching $108.2 billiona.
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 billionb, 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 billionc in common stock and increasing its quarterly dividend, signaling confidence in its future performance and ability to generate substantial free cash flow.
02—Key points
Key Highlights
- Net 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%.
- Net 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.
- Online sales experienced robust growth, increasing by 26.2% and representing 7.9% of total net sales.
- The company returned substantial value to shareholders through $10.0 billion in share repurchases and $4.7 billion in cash dividends.
- The "One Home Depot" strategy, focusing on an interconnected customer experience across stores and online, is a key driver of investments and operational improvements.
- The company maintained a high Return on Invested Capital (ROIC) of 44.8%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Home Depot, Inc. kept $0.10.
- Revenue$108.20B100.0%
- Cost of revenue−$71.04B65.7%
- Gross profit$37.16B34.3%
- Operating costs−$21.63B20.0%
- Operating income$15.53B14.4%
- Interest, other & tax−$4.41B4.1%
- Net income$11.12B10.3%
Where FY2019 revenue went
$108.20B- Cost of revenue: $71.04B, 66% of revenue
- SG&A: $19.51B, 18% of revenue
- Net income: $11.12B, 10% of revenue
- Other operating costs: $2.12B, 2.0% of revenue
- Interest, other & tax: $4.41B, 4.1% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed March 28, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $108.20B$100.90B | +7.2% |
| Cost of Revenue | $71.04B$66.55B | +6.8% |
| Gross Profit | $37.16B$34.36B | +8.2% |
| SG&A Expenses | $19.51B$17.86B | +9.2% |
| Operating Expenses | $21.63B$19.68B | +9.9% |
| Operating Income | $15.53B$14.68B | +5.8% |
| Interest Expense | $1.05B$1.06B | −0.6% |
| Net Income | $11.12B$8.63B | +28.9% |
| EPS (Basic) | $9.78$7.33 | +33.4% |
| EPS (Diluted) | $9.73$7.29 | +33.5% |
| Shares Outstanding (Basic) | 1.14B1.18B | −3.5% |
| Shares Outstanding (Diluted) | 1.14B1.18B | −3.5% |
05—Questions
Frequently Asked Questions
What is Home Depot's primary strategy for growth?
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.
How did the Tax Cuts and Jobs Act impact Home Depot's financial results?
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.
What is the company's approach to returning capital to shareholders?
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.
How is Home Depot performing in its online sales channels?
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.
06—Continue