"Home Depot, Same-Store Sales Growth Continues Due to Tax Cut Policy Impact"

[Asia Economy Reporter Eunmo Koo] The Home Depot continued its same-store sales growth in the fourth quarter of last year as profits improved due to tax cut policies.

According to KB Securities on the 29th, The Home Depot reported fourth-quarter sales of $25.8 billion, a 2.7% decrease compared to the same period last year, and operating profit of $3.4 billion, down 6.1%, slightly missing market expectations. However, the sales decline was influenced by fewer operating days, and when adjusted for operating days, sales grew 4.0% compared to the same period last year.

Additionally, the key operating indicator, same-store sales growth rate, increased by 5.2% year-over-year, and in the U.S. region, which accounts for 92% of sales, it grew by 5.3%. Due to same-store sales growth and tax cut policies, diluted earnings per share (EPS) rose 9.1% to $2.28, exceeding market expectations (diluted EPS of $2.11).

For the full year, the same-store sales growth rate increased by 3.5% compared to the previous year, and the U.S. region's same-store sales growth rate was 3.8%, driving overall company sales growth. The Home Depot provided guidance for this year with a sales growth rate of 3.5?4.0%, an operating margin of 14.0%, and same-store sales growth of 3.5?4.0%.

Researcher Jang said, “Considering the announcement to repurchase over $5 billion in shares this year and the 10% increase in the fourth-quarter dividend per share (DPS) to $1.50 (compared to the 2019 DPS of $6), shareholder return policies are expected to continue.”

However, risks were noted including production disruptions at Chinese factories due to COVID-19, a decline in scale due to falling lumber prices, and market share losses caused by the entry of online competitors.