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Last quarter, the market posted a muted reaction to a strong HD report. Revenue increased +33% YoY, online sales increased +27% YoY as consumers continued spending more on home projects (fueled partially by a booming housing market). Shares closed down -1%. The CEO noted that new home supply was helping to sustain demand for home improvement projects in the short-term: "The current shortage of new housing clearly is helping to drive improvements in the home values, which is a good thing for spending in the home." According to LikeFolio Data, Home Depot may have a very high bar to clear. Consumer mentions of shopping at Home Depot remain well below Covid-induced highs. Home Depot continues to slightly outperform peer Lowe's, though both have benefitted tremendously from shifting priority for home improvement in the last year and a half. Both companies show some weakness heading into 21Q2 reports, driven by declining buzz and demand as consumer interest in home renovation normalizes.
Home Depot Purchase Intent: -57% YoY
Lowe's Purchase Intent: -60% YoY
Home Renovation mentions: -32% YoY
Home Depot has recorded improvements in sentiment in the last year: +7 points to 60% positive, driven by a wide product selection, a competent customer service team, and perceived low prices.
This is 2 points higher than LOW, exactly the same as W, but lower than trendy decor specializers Williams-Sonoma (71% positive) and Restoration Hardware (76% positive). Looking ahead, Home Depot is investing in digital, and next-day fulfillment. The company is expanding its distribution centers. A national network of 150 facilities is part of Home Depot’s delivery expansion, which aims to provide next-day services to 90% of the U.S. population. Home Depot has also recorded stickiness in omnichannel purchasing behavior. Digital and curbside pickup mentions remain +19% higher vs. 2019. We like this name long-term, especially because of its successful omnichannel strategy and continued focus on building out logistics. But growth may be stunted on this report, comparatively.
LikeFolio analyzes social media data to accurately predict shifts in consumer behavior. We sell data and insights to professional investors, corporate research teams, and software providers.
