Home Depot went into detail on its strong 2nd quarter earnings report, answering a number of questions related to growth in its Pro category. The DIY is once again reporting its pro sales were outpacing DIY sales for the quarter.
We saw a healthy balance of growth from both our pro and DIY categories, with pro sales once again outpacing DIY sales in the quarter. Home Depot is reporting double-digit growth in the Pro category for the quarter. “Our professional sales force is driving stronger relationships and a deeper level of engagement with our pro customers which in turn leads to higher sales. This partnership is particularly important with our MRO customers where we saw strong mid-single digit growth in the quarter,” Ted Decker, Executive Vice-President of Merchandising, reported.
“We would peg that growth or that pro penetration close to 45% today. We’ve seen several years of growth where pro has outpaced consumer,” Bill Lennie, Executive Vice President of Outside Sales added. “Consumer strength has been there. The pro growth has exceeded that, and we’d peg it at about 45%.”
Lennie also sees more value in Home Depot’s Interline acquisition, and in having a trained sales force to help the Pro customer. “We’re seeing great collaboration across the organizations, which is allowing us to cross-sell between Interline’s inventories and Home Depot’s inventories,” Lennie said. “Our sales professionals really provide a service beyond just product for our customers. They are experts in their field, and with that, it does drive engagement, so we’ve seen great strength both in store and outside of the store, particularly with our MRO accounts, so that integration continues to progress nicely.”
Home Depot is also getting ready to wrap up a new B2B website for its Pro customer. It originally planned to have the e-commerce availability ready in about 18 months, but now customers may see something before the end of this year. “When we talked about this last December, we said this was a two to three-year journey, and it will be to build out all the tools and applications that our professional business customers need,” Lennie reported. “We’re still in the customer intercept interview phase and we’re in testing mode, so we’ll probably get a couple of customers over on kind of a small test as we go through Q3, but we’ll see more activity around this space in Q4.”
“We saw a demo of it yesterday, though, and the demo looked good. We’ve got to get it now out of beta into the customer hands, but it looked pretty good,” Carol Tome, Chief Financial Officer added.
There was a negative on the Pro side for Home Depot. Lighting sales are down compared to the second quarter of last year, due to LED price deflation that has impacted many distributors.
Just a few months ago, Home Depot announced it was launching a $1.2 billion dollar project to build more distribution centers and deliver goods faster. The DIY reported it has opened its first MDO, or Market Delivery Operation, and it will continue to build and open them over the next five years.
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