Home Depot Is Now a Holiday Destination With Huge Black Friday SalesMatt Townsend
Home Depot Inc. has become a bona fide holiday destination.
Deals on power tools and Christmas trees helped the retailer post its biggest sales day ever on Black Friday, with about $500 million in revenue, topping even Memorial Day. The strong performance on the day after Thanksgiving helped Home Depot on Tuesday post profit that topped analysts’ estimates by the most in three years.
The largest U.S. home-improvement retailer has beefed up its holiday assortment in recent years by adding lights and ornaments and dedicating more space at the front of stores to gifts, Chief Financial Officer Carol Tome said in an interview. Sales of tools, one of Home Depot’s top gift items, rose even faster than the company’s total fourth-quarter U.S. same-store revenue, which gained 8.9 percent.
“We’ve done a lot to make it an event,” Tome said. “And we’ve continued to increase our offering.”
Unlike for most retailers, the Christmas shopping season isn’t the most lucrative quarter for Atlanta-based Home Depot. That comes in the spring, when warmer weather spurs people to fix up their properties inside and out. For several years the chain has done a spring sales event dubbed “Black Friday,” a staple of marketing during the holidays.
As Black Friday gains importance at Home Depot, it’s actually becoming less meaningful for most retailers. What used to be a one-day event has become a week of discounts at stores and online. Chains also are promoting holiday sales earlier than ever, which pulls purchases into early November and away from Black Friday.
While spring will continue to be Home Depot’s biggest selling season, holiday shopping is becoming increasingly important, Tome said. The chain already sold the most Christmas trees of any retailer in the country, and now it’s become a destination for other categories like ornaments, she said.
Black Friday helped the chain’s companywide same-store sales rise 7.9 percent, the best performance in six quarters. Analysts projected a 5.5 percent gain. The metric is closely watched because only established stores are counted.
The results beat expectations in “shocking” fashion, said Jaime Katz, an analyst at Morningstar Inc. in Chicago.
“It displays the merchandising power of the business,” Katz said in an interview.
Home Depot shares rose 4 percent to $116.75 at the close in New York for the biggest one-day increase in six months. Lowe’s Cos. also gained, with the stock climbing 1.2 percent to $74.65. The second-largest U.S. home-improvement chain reports fourth-quarter results tomorrow.
Home Depot’s profit for the quarter rose to $1 a share. The average of 25 analysts’ estimates compiled by Bloomberg was 89 cents. The earnings beat was the biggest on a percentage basis since the quarter through January 2012.
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