Home Depot 2Q16 Earnings Call Notes

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The Home Depot’s (HD) CEO Craig Menear on Q2 2016 Results

Continue to see broad based growth

“We continue to see broad-based growth across our stores both ticket and transactions grew. All of our merchandising departments posted positive comps and we saw a healthy balance of growth among both our Pro and DIY categories with Pro sales outpacing our DIY business in the U.S.”

Tailwinds in housing could lead to home value appreciation for the next couple of years

” First of all there’s about 4.6 months of supply, average historical is about six months. So that certainly means there’s opportunity as you go forward, that’s also helping to keep home value appreciation going. And there is projections in the market out there from various sources that would say home value appreciation continues for the next couple of years for sure. And so, I think this is a tailwind that we see for the foreseeable future in the guidance window that we’ve given.”

Ted Decker

Slight commodity price inflation in materials and lumber

“Total comp transactions grew by 2.2% for the quarter, while comp average ticket increased 2.5%. Ticket growth was driven by an increase in items per basket as project business continued to show strength. Our average ticket was also positively impacted from slight commodity price inflation, mainly from building materials and lumber.”

The rising tide of Prime Day lifts a lot of boats

“Interestingly on Prime Day there is so much activity in the market place. It draws a lot of shoppers online and our customers respond, and we have a good day dropping off Prime Day.”

Carol Tome

Kitchen remodeling is seasonal

“You’d expect to see some seasonality in our kitchen business. People are on vacation during the summer time, putting a new kitchen into your home isn’t really top of your mind. We expect the kitchen business to come back in the fall time, because it typically does.”

Haven’t seen any change in home improvement patterns

“We haven’t seen any change. The fundamentals which, Craig, pointed out for housing and then the impact to home improvement are really, really good, and you go back to household formation. If the number of people in households were they drop to the 2000 plus, it would create 4.3 million new households. Now will they all go into single family owned households? No. But we serve both. ”