Whatâs Going On Here?Home Depot announced better-than-expected earnings on Tuesday, but investors arenât sure the home improvement retailerâs winning streak can last. What Does This Mean?Between rising real estate prices and the sheer amount of time everyone has on their hands, home improvement is where the heart is. And that suits Home Depot â whose sales growth is still higher than it was before the pandemic â just fine.
But it might prove a double-edged sword, with the companyâs next few earnings updates at risk of falling short of the high bar it set for itself last year. And thatâs to say nothing of the stiff competition ahead for shoppersâ dollars, when the vaccine rollout leaves DIY projects secondary to out-of-home experiences. Thatâs making investors nervous that Home Depotâs pandemic gains wonât hang around, which might be why they initially sent the retailerâs shares down. Why Should I Care?For markets: A diverse DIY business is a happy DIY business.
At least Home Depot might benefit from the resurgence in sales to plumbers, builders, and electricians, all of whom are more likely to be invited into folksâ homes when vaccines are in full effect. And this is where Home Depot has the edge over close rival Loweâs: 45% of the formerâs sales come from professionals, compared to the latterâs 25%.
The bigger picture: Department stores are back, baby.
Some retailers are already seeing the return to pre-pandemic spending in action: Macyâs, for one, just delivered its first profitable quarter in a year. And there are other signs of life for department stores, with new data showing that January saw the sectorâs first sales bump since 2019. Macyâs even reckons its own sales could grow by 20% this year â an encouraging sign, if still 13% below the companyâs pre-pandemic target for last year's sales. | 