BUSINESS

In year of pandemic, Home Depot became supplier to millions

Michell Chapman

Published Tuesday, February 23, 2021 8:38AM EST

Passers-by walk near an entrance to a Home Depot home improvement store Sunday, Feb. 21, 2021, in Boston. The Home Depot’s fiscal fourth-quarter sales surged 25% as the home improvement chain continues to meet the demands of consumers stuck at home and a resilient housing market. (AP Photo/Steven Senne)

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The housing market was among the very few bright spots for the U.S. economy in the year of the lockdown and Home Depot became its supplier, racking up an unprecedented $132 billion in sales for 2020.

Sales grew even stronger in the final quarter of the year, surging 25 per cent to US$32.26 billion. That is up from $25.78 billion in the same period last year and exceeded even the lofty projections for $30.66 billion on Wall Street, according to a survey of analysts by Zacks Investment Research.

Home improvement stores became a beehive during the pandemic with millions working and attending school remotely. Many families concluded that bigger homes, or at least different homes, were the answer in 2020. The U.S. Commerce Department has estimated that 811,000 new homes were sold in 2020, up nearly 19% from the previous year.

While Home Depot was not alone in meeting the resulting demand for hammers, paint or appliances, the sheer volume of goods sold this year were staggering.

Attempting to put it into context, Neil Saunders, the managing director of GlobalData, calculated that in 2020 the equivalent of every single person in the United States spent $402 at Home Depot.

"It is easy to look at Home Depot's numbers and chalk up its success to the pandemic," Saunders said Tuesday. "However, sustaining three quarters of growth above 20 per cent is extremely difficult in terms of the pressure it puts on the whole operation from supply chains to stores."

Global sales at stores open at least a year, a key indicator of a retailer's health, climbed 24.5 per cent, and by 25 per cent if only U.S. stores are counted.

Home Depot Inc. earned US$2.86 billion, or $2.65 per diluted share, for the three months ended Jan. 31 compared with $2.48 billion, or $2.28 per diluted share, a year earlier.

Earnings, adjusted for costs related to mergers and acquisitions, were $2.74 per share. That handily beat the $2.63 per share Wall Street was calling for.

The Atlanta company continues to withhold guidance for 2021, like many others, due to the ongoing uncertainty related to the duration of the COVID-19 pandemic.

However, in a show of confidence, the nation's biggest home improvement chain boosted its quarterly dividend 10 per cent, to $1.65 per share.