Home Depot 3Q15 Earnings Call Notes

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The Home Depot’s (HD) CEO Craig Menear on Q3 2015 Results

Craig Menear – CEO

Strength across the store

“we continue to see strength across our store. All of our merchandising departments posted positive comps and we saw healthy balance of growth among both our Pro and DIY categories.”

The retail environment has been and is changing

“The retail environment has been and is changing. Our customers, both Pro and DIY, are changing the way they shop for our products and services. Our goal is to provide our customers with the convenient and fulfillment options they require.”

How El Nino could affect things

“It really depends on obviously how this plays out. It could potentially play to a warmer northern, which means we might have a year where we have more outdoor project business running deeper into the season. The potential offset to that is a much cooler, wetter southern situation. It really depends on how this plays. We’ll be in position as we always are to try to make sure we take advantage of whatever categories will be the drivers in the different geographies and then with any luck it brings rain to California, which is desperately needed.”

Acquire where we can gain capabilities

“What we’ve said Aram is that we will look at acquisitions where it gives us the ability to gain capabilities that we might want to go build ourselves. And so if you think about some of the acquisitions that we’ve done, the BlackLocus acquisition gave us a data science capability that’s being leveraged by our merchants for assortment and price.”

Did see trading up although not more dramatic

“I wouldn’t say it’s any more dramatic than we’ve talked about before, but we do look at sales by price point and again this quarter we had a progression of higher comps as you went up price points in an assortment.”

Texas actually outperformed

“all of our major markets in Texas actually outperformed the company average comps and we’ve seen strength across the store.”

Carol Tomé – CFO

Aging home stock is a catalyst

“One thing we learned looking at data coming out of the Harvard Joint Center for Housing Studies as well as John Burns Real Estate Advising Firm, is that homes that are older than 45 years tend to be, have higher repairs. And in fact, the amount of money spent on repairs on those older homes is 5.6% higher than the amount of money paid to repair a home that’s about 20, 24 years old. There are 40 million homes in the United States that are older than 40 years. As the housing stock ages, it just bodes very well for big-box home improvement retailers to sell to those customers who need to make repairs in their homes.”