The Atlanta Journal-Constitution
Home Depot sales hit $100 billion
CFO cites home renovations, repairs as drivers of higher consumer spending.
Home Depot sales have grown more than twice as fast as the nation’s economy, a pace that will continue through this year, the company predicted Tuesday.
Although the massive Atlanta-based company opened just six new stores during the past year, growth of sales surged 6.7 percent from the previous fiscal year to break the $100 billion barrier, the company reported.
The 400,000-employee company has been working to get ever-more revenue from the same amount of space.
“Our economic engine is no longer driven by square-footage,” Carol Tome, chief financial officer, said in an interview with The Atlanta Journal-Constitution. “Our growth is driven by increased productivity and greater efficiency. We have broad-based growth across the store.”
The U.S. economy is expected to grow about 2.7 percent this year. Home Depot, which paid bonuses to workers after Congress cut taxes, expects to see sales rise 6.5 percent, Tome said.
The retail industry, in general, has been sluggish at best. Home Depot has been an exception.
When people are buying and moving into new homes, they spend on improvements. When people want to buff up the homes they are staying in, they spend on repairs and renovations.
Home Depot does not think the uptick in mortgage rates — and the expected trajectory upward — will significantly hurt sales, Tome said. Houses are, on average, affordable and a modest bump in the mortgage rates will not change that.
So after the devastating recession, the long, steady upswing of the economy and housing market has dramatically bettered Home Depot’s financial positions. As equity in a home grows, so does the incentive to spend money improving it.
“Housing is a good asset class — and people invest in their homes,” Tome said.
Home sales lately have been a little soft in many regions, especially metro Atlanta, with many people staying put, but that only adds to the reasons for spending money on renovations and repairs, she said.
About 65 percent of American homes are more than 30 years old, Home Depot says. In metro Atlanta, Home Depot has 62 stores and about 20,000 employees.