10-QPeriod: Q1 FY2018

HOME DEPOT, INC. Quarterly Report for Q1 Ended Apr 30, 2017

Filed May 23, 2017For Securities:HD

Summary

Home Depot reported a solid first quarter for fiscal year 2017, with net sales increasing by 4.9% to $23.9 billion and comparable store sales growing by 5.5%. This growth was driven by both an increase in average ticket prices and a rise in customer transactions, indicating a healthy demand for its products. The company's profitability also improved, with net earnings rising to $2.0 billion and diluted earnings per share reaching $1.67, up from $1.8 billion and $1.44 respectively in the prior year's quarter. Key operational focuses for the quarter included enhancing the customer experience through an integrated online and in-store approach, leveraging digital assets for targeted offerings, and strengthening product authority via merchandising initiatives. The company also demonstrated a commitment to shareholder value through continued share repurchases and an increased dividend payout ratio. Strong cash flow from operations further supported these activities and capital expenditures.

Financial Highlights

49 data points
Beta

Revenue

$23.89B

34.1% Gross Margin

Net Income

$2.01B

8.4% Net Margin

EPS (Diluted)

$1.67

Total Assets

$44.94B

Cash & Equivalents

$3.56B

Free Cash Flow

$4.56B

Financial Statements
Beta
Revenue$23.89B
Cost of Revenue$15.73B
Gross Profit$8.15B
SG&A Expenses$4.36B
Operating Expenses$4.80B
Operating Income$3.35B
Interest Expense$254.00M
Net Income$2.01B
EPS (Basic)$1.68
EPS (Diluted)$1.67
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.20B

Key Highlights

  • 1Net sales increased 4.9% to $23.9 billion, with comparable store sales up 5.5%.
  • 2Net earnings rose to $2.0 billion, and diluted EPS reached $1.67, an increase from $1.8 billion and $1.44 respectively in the prior year.
  • 3Online sales grew by 22.8% and represented 6.6% of total net sales.
  • 4The company continued to return capital to shareholders, repurchasing $1.2 billion in stock and increasing its targeted dividend payout ratio to 55%.
  • 5Operating income saw an 8.8% increase, reaching $3.3 billion, with operating margin improving to 14.0%.
  • 6Cash flow from operations was strong at $4.6 billion, supporting investments and shareholder returns.

Frequently Asked Questions

Home Depot reported a 4.9% increase in net sales for the first quarter of fiscal 2017, reaching $23.9 billion, compared to $22.8 billion in the prior year. Comparable store sales also showed robust growth, increasing by 5.5%.

Diluted earnings per share increased to $1.67 from $1.44 in the prior year's quarter. This improvement was driven by higher net sales, improved operating income, and a $65 million benefit from the adoption of a new accounting standard (ASU No. 2016-09) related to stock-based compensation, which contributed $0.05 to EPS.

Home Depot is focusing on an integrated customer experience across both its physical stores and online channels. This includes leveraging digital assets to better understand customer needs, offering targeted online promotions, and simplifying the online checkout process. The company is also working to connect its stores with its online properties and vice versa, along with rolling out products from its acquired Interline business.

The company generated strong operating cash flow of $4.6 billion. It actively returned capital through share repurchases, buying back $1.2 billion of stock in the quarter under a new $15.0 billion authorization, and through dividends, paying $1.1 billion. The company also increased its targeted dividend payout ratio to 55% of diluted earnings per share.