Home Depot Boasts 40% Online Sales Growth
By Christine Kern, contributing writer
Q2 2014 Sales Report Marks Growth in Dot.Com Sales for Home Depot
Following a 50 percent web sales growth in last year’s fourth quarter as a result of the acquisition of Blinds.com, Home Depot Inc. continued its e-commerce surge with 39 percent web sales growth in the first quarter of 2014. Without providing specific web sales numbers, the retailer did disclose that web sales represented 4.2 percent of its total sales, which grew nearly 3 percent to $19.69 billion, in the first quarter.
For the quarter ended May 4, 2014, Home Depot reported:
- Web sales accounted for 4.2 percent of total sales, up from 3.1 percent in Q1 2013.
- Net sales increased about 3 percent from $19.12 billion to $19.69 billion during the same period last year.
- Web sales in Q1 are estimated to have increased about 39.5 percent to $826.9 million from $592.8 million last year.
- Net earnings were $1.38 billion, up 12.2 percent from $1.23 billion last year.
- Comparable-store sales increased 2.6 percent.
The 38 percent growth in web sales was higher than the company expected heading into the quarter, said chief financial officer and executive vice president of corporate services Carol Tome in a May 20 earnings call. “I'd say first of all our dotcom business grew faster than what we planned. So we were very pleased by this,” said Tome. “Remember, we are ‘anniversarying’ the launch of Buy Online Ship to Store. So we had expected the growth rates to slow down.” Tome said almost $100 million of the $232 million in retailer’s first quarter web sales growth was related to Buy Online Ship to Store sales. “It's a business that we continue to invest into, because it's part of our interconnected retail strategy.”
Tome stated, “This is an interesting data point – print will be less than 10% of our total advertising spend this year while digital is 36% and trending higher. We like the return on investment that we see.”
She continued, “Yes, dot-com sales made up 4.2% of our total sales at the end of the second quarter – that’s up 100 basis points from a penetration perspective year-on-year. Hard to actually measure incrementally, but I would say buy online, ship to store is 100% incremental, and that in the second quarter was $144 million.”
Home Depot also launched a dedicated e-commerce site for Mexico, after experiencing its 42nd consecutive quarter of positive comp-store sales there. The Mexican e-commerce site now serves limited geographies, but Home Depot eventually plans to cover the entire country.
Chairman and CEO Frank Blake was also pleased with the company’s e-commerce growth in the quarter. “We are consistently seeing over 3 million visits per day and our conversion rate continues to increase,” Blake said in the earnings call. “Also our dotcom presence was a contributing factor to our transaction growth.”
Craig Menear stated, “We continue to drive efficiency through multiple initiatives. While in the early days, our new merchandising tools are starting to deliver benefits.” According to Menear, Home Depot has “also changed the way we communicate with our customers and had shifted our approach to support a more targeted, personalized messaging to become more relevant to the customer. As a result, costs attributable to traditional print advertising have been reduced by over 60 percent since 2010 and have been shifted to a more efficient digital delivery method.”
And finally, “we continue to enhance the customer service experience in our stores and provide our associates the tools necessary to do so. In the second half of 2014, we are introducing the next generation of our First Phone, which is an associate and customer service tool. It will allow for internet access to assist with questions and online orders and will be equipped to complete the check-out process in aisle for our customers. These exciting products, events and tools will allow our associates to be ready for success in the third quarter.”