Four Charts: Home Depot Benefits From the Housing Market Rebound

• February 21 2018
• Brandon Kochkodin

The U.S. housing market is hot again, more than a decade after the last great boom, and the world’s largest home-improvement chain Home Depot Inc. is benefiting.

The U.S. housing market is hot again, more than a decade after the last great boom, and the world’s largest home-improvement chain Home Depot Inc. is benefiting. 

A closer look at data compiled by Bloomberg shows exactly how, and also shows how its chief competitor, Lowe’s Cos. Inc., could up its game.

Atlanta-based Home Depot spent $1.9 billion on capital expenditure in the 2018 fiscal year (which ended Jan. 28), mainly on improving existing stores rather than buying new ones. That was 17 percent higher than the prior year, the biggest jump since 2004.

The impact of existing store improvements may be seen in the growth in average sales per customer and same-store sales growth. Customers spent an average of 4.5 percent more in fiscal 2018 than the year prior, the biggest increase since 2006.

And the company tied its best annual same-store sales growth since 2000 as a result. Same-store sales increased 6.8 percent last year, the same as 2014.

On Feb. 28, it will be Lowe’s moment to present its results. It’s likely to have been buoyed by millennials buying homes and hurricane recovery efforts, but its growth is predicated on expanding its footprint.

Lowe’s same-store sales growth has trailed Home Depot’s for eight straight years, attracting the attention of activist investor D.E. Shaw & Co., which has said the company’s stock price could triple if it can bring sales and costs into line with those of Home Depot. Lowe’s operating margin has trailed Home Depot’s every year since 2009.

— With assistance by Jamie Rickards, and Matthew Townsend