Home Depot 4Q13 Earnings Call Notes

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A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

4.4% comp store growth

“Excluding that additional week in 2012, sales for the fourth quarter were up 3.9% from the prior year. Comp sales were positive 4.4% and our diluted earnings per share were $0.73.”

Expecting home prices to increase, but not by as much as in 2013

“It is not our view that all housing metrics will sustain the growth rates from 2013 going forward. This last year saw a particularly strong recovery in housing prices but we do expect the housing recovery to continue, expect that home prices will increase even though at a lower rate and expect that affordability will support growth in the home improvement market”

It’s been a tough winter but February comps are positive

“I will also note that the extreme winter weather in February hasn’t been our friend, but our February comps are positive and we know firsthand that many homeowners have some major repairs ahead of them, which suggest we should have a great spring selling season.”

We don’t use acquisitions as a means to sales growth

“we use acquisitions really not as a supplement to sales growth but as a supplement to competences that we think are important to add to our capabilities and I would anticipate that that would be the case going forward.”

West was best division, not affected by weather

“the Western division was our strongest performing division and that was the least impacted by weather.”

Wells Fargo loosening mortgage standards

“We thought all along that credit availability was the big driver of the housing recovery and the shape of the recovery curve. We are very encouraged by what we have seen at Wells Fargo. Wells Fargo has announced that they are taking the FICO scores for FHA loans, down from what was 640 to now 600.”

Commodity price inflation helped sales growth last year. Going to see commodity price deflation this year

“In 2013, we enjoyed commodity inflation, not thinking that’s going to happen this year. In fact, we are going to have some pressure from commodity price deflation. So that would be one driver.”