Summary
The Home Depot, Inc. reported robust financial results for the first quarter of fiscal year 2018, ending April 29, 2018. Net sales increased by 4.4% to $24.9 billion compared to the prior year, driven by a 4.2% increase in comparable sales. This growth was fueled by a 5.8% rise in comparable average ticket, indicating customers are spending more per transaction, alongside a slight decrease in customer transactions. The company experienced a significant improvement in its effective tax rate, dropping to 23.5% from 35.2% in the prior year, largely due to the enactment of the Tax Act, which contributed approximately $0.32 per diluted share. Diluted earnings per share saw a substantial increase of 24.6% to $2.08.
Financial Highlights
49 data pointsBeta
Financial Statements
Beta
| Revenue | $24.95B |
| Cost of Revenue | $16.33B |
| Gross Profit | $8.62B |
| SG&A Expenses | $4.78B |
| Operating Expenses | $5.24B |
| Operating Income | $3.38B |
| Interest Expense | $261.00M |
| Net Income | $2.40B |
| EPS (Basic) | $2.09 |
| EPS (Diluted) | $2.08 |
| Shares Outstanding (Basic) | 1.15B |
| Shares Outstanding (Diluted) | 1.16B |
Key Highlights
- 1Net sales for Q1 FY2018 grew 4.4% to $24.9 billion.
- 2Comparable sales increased by 4.2%, indicating healthy performance in existing stores and online.
- 3Diluted Earnings Per Share (EPS) rose by 24.6% to $2.08, significantly boosted by the Tax Act.
- 4Gross profit margin improved to 34.5% from 34.1% in the prior year, partly due to new revenue recognition standards and product mix.
- 5The effective income tax rate decreased substantially from 35.2% to 23.5% following the Tax Act.
- 6The company repurchased $1.0 billion of common stock in Q1 FY2018, continuing its capital return strategy.
- 7Operating cash flow of $3.98 billion demonstrates strong cash generation, though down from the prior year's $4.56 billion, primarily due to inventory investments.
Frequently Asked Questions
Net sales increased by 4.4% to $24.9 billion primarily due to a 4.2% increase in comparable sales, which was driven by a 5.8% increase in the comparable average ticket. This indicates customers are spending more per purchase, despite a slight decrease in the number of transactions. The adoption of ASU No. 2014-09 also contributed $33 million to net sales.
The Tax Act significantly lowered Home Depot's effective income tax rate from 35.2% in the first quarter of fiscal 2017 to 23.5% in the first quarter of fiscal 2018. This reduction in tax expense directly boosted net earnings, contributing approximately $0.32 per diluted share.
Home Depot continues to return capital through a combination of share repurchases and dividends. In the first quarter of fiscal 2018, the company repurchased $1.0 billion of its common stock, including an Accelerated Share Repurchase (ASR) agreement. Additionally, it declared a dividend of $1.03 per share, representing a 15.7% increase from the previous quarter.
The company's merchandise inventories increased from $12.7 billion at the end of fiscal 2017 to $14.4 billion at the end of the first quarter of fiscal 2018. This increase is reflected as a significant use of cash in operating activities ($1.687 billion) and is attributed to increased inventory purchases, likely in anticipation of demand and to support sales growth. Despite the increase, the inventory turnover ratio remained at 4.9 times.