The Home Depot saw a 0.6% increase in revenue in the second quarter of 2024 compared to the same time last year, crediting its $1.3 billion acquisition of SRS Distribution as part of its success.
In its Q2 2024 earnings report, The Home Depot reported sales of $43.2 billion. The $1.3 billion represents about six weeks of sales in the quarter. Meanwhile, comparable sales for the second quarter of fiscal 2024 decreased by 3.3%, and comparable sales in the U.S. dropped by 3.6%.
The Home Depot closed on the acquisition on June 18, with SRS expected to contribute $6.4 billion in incremental sales. Ted Decker, chair, president and CEO, said during an earnings call on Wednesday that SRS Distribution has "an exceptional team with a proven growth track record" and looks forward to what the companies can achieve by combining assets, capabilities and "competitive advantages."
"While our financials only reflect a portion of their first-half performance for the first six-month period matching our first half, they generated high single-digit, top-line growth while growing operating income largely in line with sales compared to the previous years," he said. "We will make their more comprehensive product offerings in roofing, pool, and landscape available to all our customers through our Pro desk, and we will offer SRS customers a form of credit tied to their account, which will make purchases in Home Depot stores much more convenient.”
Decker said Home Depot is remaining focused on capturing market share in the highly-fragmented $1 trillion home improvement market, noting the company currently has 17% market share.
Richard McPhail, executive vice president and chief financial officer, also commented on the impact the acquisition is expected to have, saying they expect total sales growth between 2.5% and 3.5%, including the SRS acquisition and the 53rd week.
"We believe that, over the next several years, SRS on its own and through our combined Pro efforts will help accelerate sales and earnings growth for our company," he said.
Billy Bastek, executive vice president of merchandising for Home Depot, said big-ticket comp transactions for those over $1,000 were down 5.8% compared to the second quarter of last year. Despite this, he said the company is experiencing "softer engagement" in larger, discretionary projects where customers typically use financing to fund the project, such as kitchen and bathroom remodels.
"Pros outperformed the DIY customer, but both were negative for the quarter. We saw positive growth with Pros who engage in our Pro Xtra program, deliveries to the job site, and our B2B website," he said.
Regarding its Pros customers, Ann-Marie Campbell, senior executive vice president, said the company now has pro capabilities in 17 markets, including a broader product assortment, digital assets, a sales force and increased fulfillment options.
"We are also making progress on our order management system as we continue to roll out enhancements to the end-to-end selling system," she said.
Net earnings for the second quarter of fiscal 2024 were $4.6 billion, or $4.60 per diluted share, compared with net earnings of $4.7 billion, or $4.65 per diluted share, in the same period of fiscal 2023.
Decker noted that, given the performance of the first half of the year and uncertainty about consumer demand, "a more cautious sales outlook" is warranted for the rest of the year.
“The underlying long-term fundamentals supporting home improvement demand are strong,” said Decker. “During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects.
"However, the team continued to navigate this unique environment while executing at a high level. I would like to thank our associates for their hard work and dedication to serving our customers and communities.”
