Home Depot Inc (NYSE:HD) has reported earnings per share at $2.53 in Q3 2019, marginally higher than the forecast of $2.52. The stock now trades at $221.36 (up 0.21%). However, its sales growth is 3.5% in 2019 when compared to the previous guidance of 4.0%.
Home Depot takes longer to improve sales
Craig Menear, Chief Executive Officer of Home Depot, said Q3 2019 results show wide a growth in all the sectors. However, the sales are below expectations because of certain arrangements for the investments. He said the company is on track to realize sales from the investments. Despite achieving positive sales, it would take a longer time to realize anticipated results in 2019.
According to a communiqué in 2017, Home Depot planned to invest $5.4 billion to integrate brick & mortar outlets with its digital initiatives. Home Depot reserved investments to provide an interconnected and seamless experience to the customers. In tune with the previously announced strategy, the company provided lockers at the front of the stores. It allows the customers to place an order online and collect the packages from the store.
The shoppers want to have a look and physical feel when buying a certain product online. Therefore, visiting a nearby store and collecting the package in-person serves the purpose. It offers protection from some online retailers and Amazon because professional builders want to have a feel and touch of the product when they purchase the product.
Lower sales are a small dent
The lower than expected sales is a small dent in the performance of Home Depot because 2019 is a solid year for the company. Home Depot lowered the sales outlook in August 2019 because of worries of higher tariffs, reduced timber prices, and the ongoing trade war with China. Jonathan Matuszewski, an analyst at Jefferies, said the market misinterpreted the results. According to the analyst, the operating margins of Home Depot are in line with the expectations.
The shares of Home Depot ruled higher at 40% for the most part of 2019. It is one of the best performers in Dow. According to executives of Home Depot, the sale for home improvement is a bit tough.