10-QPeriod: Q1 FY2015

HOME DEPOT, INC. Quarterly Report for Q1 Ended May 4, 2014

Filed May 28, 2014For Securities:HD

Summary

The Home Depot, Inc. (HD) reported strong performance in its first quarter ended May 4, 2014. Net sales grew by 2.9% to $19.7 billion, with comparable store sales increasing by 2.6%. This growth was driven by a rise in customer transactions and average ticket size, indicating healthy consumer demand for home improvement products. The company demonstrated effective cost management, with Selling, General, and Administrative (SG&A) expenses as a percentage of net sales decreasing to 21.3% from 21.9% in the prior year. This, combined with a modest increase in gross profit margin, led to a significant 8.7% rise in operating income to $2.3 billion. Diluted Earnings Per Share (EPS) also saw a substantial increase of 20.5%, reaching $1.00 compared to $0.83 in the prior year, partly boosted by a $0.04 benefit from the sale of HD Supply shares.

Financial Highlights

50 data points
Beta

Revenue

$19.69B

34.3% Gross Margin

Net Income

$1.38B

7.0% Net Margin

EPS (Diluted)

$1.00

Total Assets

$42.63B

Cash & Equivalents

$2.51B

Free Cash Flow

$2.57B

Financial Statements
Beta
Revenue$19.69B
Cost of Revenue$12.93B
Gross Profit$6.76B
SG&A Expenses$4.07B
Operating Expenses$4.48B
Operating Income$2.28B
Interest Expense$191.00M
Net Income$1.38B
EPS (Basic)$1.01
EPS (Diluted)$1.00
Shares Outstanding (Basic)1.37B
Shares Outstanding (Diluted)1.38B

Key Highlights

  • 1Net sales increased 2.9% year-over-year to $19.7 billion, driven by a 2.6% increase in comparable store sales.
  • 2Diluted Earnings Per Share (EPS) grew by 20.5% to $1.00, compared to $0.83 in the prior year.
  • 3Operating income rose by 8.7% to $2.3 billion, benefiting from improved gross margins and expense leverage.
  • 4Online sales experienced robust growth, increasing approximately 39% and now representing 4.2% of total net sales.
  • 5The company returned significant capital to shareholders, repurchasing $1.25 billion of common stock and paying $646 million in dividends.
  • 6Cash flow from operations remained strong at $2.6 billion, supporting investment and shareholder returns.
  • 7A gain of $97 million pre-tax was recognized from the sale of a portion of the company's equity in HD Supply Holdings, Inc.

Frequently Asked Questions

Sales growth was primarily driven by a 2.6% increase in comparable store sales, supported by a 2.1% rise in customer transactions and a 0.5% increase in the average ticket price. Strong performance in various departments, including Tools, Electrical, Plumbing, and Building Materials, contributed to the overall sales increase.

The company demonstrated effective expense management. Selling, General, and Administrative (SG&A) expenses decreased as a percentage of net sales to 21.3% from 21.9% in the prior year. This was attributed to strong expense controls and expense leverage from positive comparable store sales.

The sale of a portion of Home Depot's equity investment in HD Supply Holdings, Inc. resulted in a pre-tax gain of $97 million and contributed $0.04 to the diluted earnings per share for the quarter. This was a one-time event that positively impacted the company's net earnings.

The company is actively returning value through share repurchases and dividends. In the first quarter of fiscal 2014, Home Depot repurchased $1.25 billion of its common stock, including through an Accelerated Share Repurchase (ASR) agreement, and paid $646 million in cash dividends to stockholders.