One Home Depot digital transformation project is delivering returns slower than expected and will cut into sales growth.
Home Depot last year outlined an ambitious strategy to meld its supply chain, digital footprint and physical store experience and projected that its digital transformation efforts would deliver 2020 sales of $115 billion and $120 billion with a return on invested capital as high as 40%.
• 3rd quarter net income of $2.8 billion, or $2.53 a share, on revenue of $27.2 billion, up 3.5% from a year ago. Same store sales were up 3.6% globally and 3.8% in the US.
• Pro sales outpaced do it yourself demand in the third quarter. Ticket and transactions grew in the quarter.
• The Home Depot one site has seen traffic growth and better conversion rates due to fulfillment options and the omnichannel experience. Online sales were up 22% in the third quarter and “we also continue to leverage our digital platforms to drive incremental growth from adjacent categories like HD Home, Cool and Workwear and are seeing good traction across all of these categories.”
• More than 50% of online orders were picked up in stores.
Craig Menear, CEO said Home Depot is on track with its technology investments, but returns “will take longer to realize than our initial assumptions.”