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What you need to know about Home Depot’s earnings

Home Depot CEO Craig MenearHome Depot CEO Craig Menear
Home Depot CEO Craig MenearCourtesy of Home Depot

It’s been 18 days since Craig Menear took over as CEO of the Home Depot (HD) from Frank Blake. Judging from his first earnings call earlier today, he’s not about to make any big changes. “Our strategic framework is built from the customer back,” he said in response to an analyst question. “I wouldn’t look for a dramatic departure from any of the strategies we’ve had in place. We think that works.”

That’s a good thing. Even following a major security breach in which some 50 million customers saw their personal information disclosed, Home Depot is on a roll, posting an earnings gain of 21.1% and a 5.2% increase in same-store sales in the 3rd quarter—a rare bright spot in an increasingly dark retail sector. Improvements (albeit slow) in the housing market and the economy overall helped. But really, the company is thriving because of good old-fashioned execution. Here are three elements in the earnings report that reveal a lot about what’s really going on at the company.

1. There were positive comparisons in ALL departments.

Each product area improved its sales relative to the previous year; both the consumer and the professional businesses grew; and each month in the quarter was better than the same month in the previous year. This points to consistency of the sort that one rarely sees in retail. That’s particularly surprising after such a major security problem, which typically has a major negative impact on sales.

2. Online continues to surge

In the past quarter, online revenues grew by 40% compared to the same quarter a year ago. This was a real emphasis of Menear’s, a Home Depot veteran, before he got the CEO job. It’s also a realm in which the company, previously a laggard, has major potential. What’s more, some 40% of all online orders were picked up in the store, which, one would assume, is another opportunity to sell even more product.

3. West Coast port disruptions could mean trouble

During the Q&A, Mark Holifield, EVP of Supply Chain and Product Development, was asked about disruptions at West Coast ports due to a driver’s strike and the possibility of a longshoreman’s strike. “We’ve been able to land the Black Friday fleet,” he said, “but we are concerned over the long haul here.” Reading between the lines, it’s safe to expect that at least some retailers will be caught short of product unless new agreements are reached very soon.