On Tuesday, Home Depot released fourth quarter results that exceeded expectations, but did not provide a forecast and said it could not predict “how consumer spending will evolve” in 2021.
Video transcription
MYLES UDLAND: Okay, let’s talk briefly about Home Depot. Shares fell slightly in the pre-market. And I think that goes to the theme of what – they said they’re looking for, the language was, if the year-round trends for comp sales continue for the fiscal 21, they’ll see comps from plans to slightly positive. This comes after a year in which they had 20% comps year on year. Which is flat to slightly positive for Home Depot, probably great for you and me to come back to do something other than stay at home. But after such a killer year, it’s no big surprise that Home Depot isn’t really looking for another year of 20% growth as they saw in 2020.
BRIAN SOZZO: Okay, Myles. And I think that while you are watching the shares maybe not going up much or just a little under the pressure bias, they did not come out with guidance. They fell, to their point, they left the comment about sales from the same store at the bottom of the press release. But the company is being criticized in some of the first analysts’ notes for not leaving after a year of real explosion and leaving with a strong orientation. Especially look, Macy’s left with guidance. And they’ve been going down the drain for the past two years. And even that company came out with guidance.
Therefore, Home Depot probably should have presented some form of sales, operating margin, earnings per share orientation, as it normally would in normal times. Even so, a very strong quarter. And I think if you’re a trader in this market, this is the type of quarter for Home Depot where you browse, do your fundamental research on Whirlpool, do your fundamental research on a Sherman Williams or Mohawk, the largest carpet manufacturer from the country. Because they showed a 25% increase in same store sales in the USA.
This is a gain I have never seen before at this company. It is a very strong quarter, very strong. And that suggests that some form of momentum continued at least in the first quarter of this year. And I suspect Home Depot will talk about this in its earnings conference call.
MYLES UDLAND: Yes, I mean, for a company of that size, just a ridiculous comp number to put on. But it’s interesting, the stock peak was in August and you wonder how much this mix of, we think we’ve reached all of our customers, we’ve increased x sales volume versus there are things we can’t provide for our customers. Think of lumber. The price of wood has gone up. I didn’t mean it that way, but anyway, you got the pun. Anyway, all these things, I think that maybe the restriction of supply is part of the improvement cycle of the Home Depot. And we’ll see how that plays out.