The Home Depot, Inc. (HD) Bundle
A Brief History of The Home Depot
The Home Depot, Inc. (NYSE: HD), founded in 1978, has grown to become the largest home improvement retailer in the United States, offering a vast range of products and services for home improvement, construction, and repair. As of 2024, Home Depot operates over 2,300 stores across North America, including the U.S., Canada, and Mexico, with a workforce of approximately 500,000 associates.
Recent Financial Performance
For the fiscal year ending January 28, 2024, Home Depot reported net earnings of $8.16 billion, compared to $8.53 billion in the previous fiscal year. The company experienced a decrease in net earnings primarily due to changes in consumer spending patterns and market conditions.
| Fiscal Year | Net Earnings (in billions) | Revenue (in billions) | Operating Income (in billions) |
|---|---|---|---|
| 2024 | $8.16 | $151.00 | $14.00 |
| 2023 | $8.53 | $157.00 | $15.00 |
Stock Performance
As of July 28, 2024, The Home Depot's stock was trading at an average price of $351.86 per share. The company has a market capitalization of approximately $363 billion, reflecting its strong position in the retail market despite recent challenges.
Share Repurchase Program
In August 2023, the Board of Directors approved a $15 billion share repurchase program. As of July 28, 2024, approximately $11.7 billion of this authorization remained available for repurchase, indicating the company’s commitment to returning value to shareholders.
| Period | Total Shares Purchased | Average Price Paid Per Share | Total Cost of Shares Repurchased (in millions) |
|---|---|---|---|
| Q2 2024 | 8,689 | $351.86 | $3,100 |
| Q2 2023 | 7,000 | $288.00 | $2,016 |
Acquisitions
In May 2024, Home Depot announced the acquisition of SRS Distribution for $17.57 billion, significantly expanding its reach in the distribution of building materials. This strategic move is expected to enhance Home Depot's supply chain and improve service delivery to its customers.
Cash Flow Analysis
For the six months ended July 28, 2024, Home Depot reported cash flows from operating activities totaling $10.91 billion, a decrease from $12.21 billion in the same period of the previous year. This decline was attributed to changes in working capital and increased inventory levels.
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash from Operating Activities | $10,906 | $12,205 |
| Net Cash Used in Investing Activities | ($19,098) | ($1,902) |
| Net Cash from Financing Activities | $6,113 | ($10,266) |
Debt Management
As of July 28, 2024, Home Depot maintained a strong liquidity position with total debt of approximately $30 billion. The company has a commercial paper program that allows for borrowings up to $19.5 billion, reflecting its proactive approach to managing financial flexibility.
Future Outlook
Looking ahead, Home Depot aims to leverage its extensive store network, e-commerce capabilities, and recent acquisitions to drive growth and enhance customer experience. The company is focused on adapting to market trends and consumer preferences in the home improvement sector.
A Who Owns The Home Depot, Inc. (HD)
Ownership Structure
As of 2024, The Home Depot, Inc. (HD) has a diverse ownership structure consisting of institutional investors, individual shareholders, and company insiders. The largest shareholders include various mutual funds and pension funds.
Major Shareholders
| Shareholder | Type | Percentage Ownership | Shares Held |
|---|---|---|---|
| The Vanguard Group, Inc. | Institutional Investor | 8.6% | 112.3 million |
| BlackRock, Inc. | Institutional Investor | 7.4% | 97.4 million |
| State Street Corporation | Institutional Investor | 4.1% | 54.0 million |
| FMR LLC (Fidelity) | Institutional Investor | 3.5% | 46.0 million |
| Directors and Executives | Insider Ownership | 0.2% | 2.5 million |
| Other Individual Shareholders | Retail Investors | 76.2% | 1.0 billion |
Insider Ownership
Insider ownership represents a small fraction of the total shares, indicating a strong presence of institutional and retail investors. The company's executives and directors typically hold less than 1% of the total shares outstanding.
Recent Developments
The Home Depot announced a share repurchase program, authorizing up to $15 billion in stock buybacks, which will further influence the ownership structure by reducing the number of shares outstanding.
Stock Performance
As of July 28, 2024, The Home Depot's stock price was approximately $350.36, reflecting a market capitalization of around $366 billion. The shares have shown a steady performance, with an annual dividend of $2.25 per share following a 7.7% increase announced in February 2024.
Comparison with Competitors
In comparison to its primary competitors, The Home Depot maintains a leading position in the home improvement retail market, with strong institutional backing compared to Lowe's Companies, Inc., which has a slightly different shareholder composition.
Conclusion on Ownership Dynamics
The ownership dynamics of The Home Depot, Inc. as of 2024 illustrate a robust institutional presence complemented by a significant retail investor base, reflecting confidence in the company's long-term growth potential and market leadership.
The Home Depot, Inc. (HD) Mission Statement
The Home Depot, Inc. (HD) aims to provide the highest level of service, the broadest selection of products, and the most competitive prices. As of 2024, their mission statement emphasizes a commitment to enhancing customer experience through innovation, sustainability, and community involvement.
Financial Overview
For the first six months of fiscal 2024, The Home Depot reported:
- Net sales of $79.6 billion, a decrease of 0.7% from the previous year.
- Net earnings of $8.2 billion, translating to $8.23 per diluted share.
- Comparable sales decreased by 3.1%.
- Average ticket price decreased by 1.3% to $89.72.
- Customer transactions decreased by 1.4% to 837.8 million.
Sales Performance by Quarter
| Quarter | Net Sales (in billions) | Gross Profit (in billions) | Net Earnings (in billions) | Diluted EPS |
|---|---|---|---|---|
| Q2 2024 | $43.2 | $14.4 | $4.6 | $4.60 |
| Q2 2023 | $42.9 | $14.2 | $4.7 | $4.65 |
Capital Expenditures and Investments
The Home Depot plans to invest approximately $3.0 billion to $3.5 billion in capital expenditures for fiscal 2024. This investment will focus on:
- New store openings.
- Enhancing customer experience through technology.
- Development of differentiated capabilities.
Shareholder Returns
In February 2024, The Home Depot announced a 7.7% increase in its quarterly cash dividend from $2.09 to $2.25 per share. During the first six months of fiscal 2024, the company paid out $4.5 billion in cash dividends to shareholders.
Debt and Liquidity
The Home Depot increased its commercial paper program from $5.0 billion to $19.5 billion in May 2024 to facilitate the acquisition of SRS. The company’s total liabilities as of July 28, 2024, amounted to $92.4 billion, with long-term debt, excluding current installments, at $51.9 billion.
Acquisition of SRS
The Home Depot completed the acquisition of SRS on June 18, 2024, for a total cash purchase consideration of $17.7 billion. This acquisition is expected to enhance the company’s capabilities in serving professional customers.
Net Sales by Geography
| Geography | Q2 2024 Net Sales (in billions) | Q2 2023 Net Sales (in billions) |
|---|---|---|
| U.S. | $39.5 | $39.2 |
| Outside U.S. | $3.7 | $3.7 |
Net Sales by Products and Services
| Category | Q2 2024 Net Sales (in billions) | Q2 2023 Net Sales (in billions) |
|---|---|---|
| Products | $41.6 | $41.4 |
| Services | $1.6 | $1.6 |
How The Home Depot, Inc. (HD) Works
Financial Overview
As of the second quarter of fiscal 2024, The Home Depot reported net sales of $43.2 billion, representing a 0.6% increase from $42.9 billion in the second quarter of fiscal 2023. For the first six months of fiscal 2024, net sales totaled $79.6 billion, a decrease of 0.7% from $80.2 billion during the same period in fiscal 2023. The decline in net sales was attributed to a negative comparable sales environment impacted by a reduction in customer transactions and average ticket prices.
| Metric | Q2 2024 | Q2 2023 | Change (%) |
|---|---|---|---|
| Net Sales | $43.2 billion | $42.9 billion | 0.6% |
| Net Earnings | $4.6 billion | $4.7 billion | (2.1%) |
| Diluted Earnings per Share | $4.60 | $4.65 | (1.1%) |
| Gross Profit | $14.4 billion | $14.2 billion | 1.4% |
| Gross Profit Margin | 33.4% | 33.0% | 0.4% |
Operational Metrics
The Home Depot operates a total of 2,340 stores as of July 28, 2024, including 321 stores located in Canada and Mexico. The company opened two new stores in the U.S. and one new store in Mexico during the second quarter of fiscal 2024. The sales per retail square foot were reported at $660.17 for Q2 2024, compared to $684.65 in Q2 2023, reflecting a decrease of 3.6%.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Stores | 2,340 | 2,338 |
| Sales per Retail Square Foot | $660.17 | $684.65 |
| Inventory Turnover Ratio | 4.9 times | 4.4 times |
Sales Performance
Comparable sales for the second quarter of fiscal 2024 decreased by 3.3%. This decline was driven by a 2.2% decrease in comparable customer transactions and a 1.3% decrease in the average ticket price. The average ticket price in Q2 2024 was $88.90, down from $90.07 in Q2 2023. Online sales represented 14.9% of total net sales during this period, showing an increase of 3.9% compared to the prior year.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Comparable Sales Change | (3.3%) | (2.0%) |
| Customer Transactions (in millions) | 451.0 | 459.1 |
| Average Ticket | $88.90 | $90.07 |
Cost and Expenses
The total operating expenses for the second quarter of fiscal 2024 were $7.9 billion, which is an increase of 4.1% compared to $7.6 billion in Q2 2023. Selling, General and Administrative (SG&A) expenses rose to $7.1 billion, accounting for 16.5% of net sales. Depreciation and amortization expenses increased to $738 million, representing 1.7% of net sales.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Operating Expenses | $7.9 billion | $7.6 billion |
| SG&A Expenses | $7.1 billion | $6.9 billion |
| Depreciation and Amortization | $738 million | $653 million |
Cash Flow and Capital Allocation
During the first six months of fiscal 2024, The Home Depot generated $10.9 billion in cash flow from operations. The company paid cash dividends totaling $4.5 billion and invested approximately $1.6 billion in capital expenditures. The company’s cash position at the end of Q2 2024 was $1.6 billion, of which $1.1 billion was held by foreign subsidiaries.
| Metric | First Half 2024 |
|---|---|
| Cash Flow from Operations | $10.9 billion |
| Cash Dividends Paid | $4.5 billion |
| Capital Expenditures | $1.6 billion |
| Cash Position | $1.6 billion |
Debt and Financing
The Home Depot's long-term debt, excluding current installments, totaled $51.9 billion as of July 28, 2024. The company issued $10.0 billion in senior notes in June 2024 to finance the acquisition of SRS, a residential specialty trade distribution company. The weighted average interest rate on outstanding commercial paper borrowings was reported at 5.4%.
| Metric | As of July 28, 2024 |
|---|---|
| Long-term Debt | $51.9 billion |
| Commercial Paper Borrowings | $2.5 billion |
| Weighted Average Interest Rate | 5.4% |
How The Home Depot, Inc. (HD) Makes Money
Revenue Streams
The Home Depot generates revenue primarily through the sale of home improvement products and services. For the second quarter of fiscal 2024, net sales were reported at $43.2 billion, representing a 0.6% increase from $42.9 billion in the same quarter of 2023.
For the first six months of fiscal 2024, net sales were $79.6 billion, a slight decline of 0.7% from $80.2 billion in the first six months of fiscal 2023.
| Period | Net Sales (in billions) | Change (%) |
|---|---|---|
| Q2 2024 | $43.2 | +0.6% |
| First Half 2024 | $79.6 | -0.7% |
Product Categories
The sales composition by major product lines for the second quarter of fiscal 2024 is as follows:
| Product Line | Net Sales (in millions) | Previous Year Comparison |
|---|---|---|
| Building Materials | $13,935 | -2.3% |
| Décor | $13,591 | -1.9% |
| Hardlines | $14,375 | -2.8% |
| Other | $1,274 | N/A |
Comparable Sales Performance
Comparable sales for the second quarter of fiscal 2024 decreased by 3.3%, driven by a 2.2% decline in comparable customer transactions and a 1.3% drop in comparable average ticket.
For the first six months, total comparable sales also decreased by 3.1%.
Online Sales Growth
Online sales accounted for 15.1% of total net sales in the first half of fiscal 2024, showing an increase of 3.6% compared to the previous year.
Gross Profit and Margins
Gross profit for the first six months of fiscal 2024 was reported at $26.8 billion, resulting in a gross profit margin of 33.7%, up from 33.3% in the previous year.
| Period | Gross Profit (in billions) | Gross Profit Margin (%) |
|---|---|---|
| First Half 2024 | $26.8 | 33.7% |
Operating Expenses
Operating expenses for the first six months of fiscal 2024 totaled $15.2 billion, which is 19.1% of net sales, compared to 18.2% for the same period in 2023.
Net Earnings and Earnings Per Share
Net earnings for the second quarter of fiscal 2024 were $4.6 billion, resulting in diluted earnings per share of $4.60. For the first six months, net earnings reached $8.2 billion, with diluted earnings per share of $8.23.
| Period | Net Earnings (in billions) | Diluted Earnings Per Share |
|---|---|---|
| Q2 2024 | $4.6 | $4.60 |
| First Half 2024 | $8.2 | $8.23 |
Cash Flow and Capital Expenditures
In the first six months of fiscal 2024, Home Depot generated $10.9 billion in cash flow from operations and invested approximately $1.6 billion in capital expenditures.
Debt and Financing
As of July 28, 2024, Home Depot had $2.5 billion in commercial paper borrowings outstanding. In June 2024, the company raised $10.0 billion through the issuance of long-term debt to finance the acquisition of SRS.
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