Home Depot reported a healthy 21.5% increase in online sales when reporting its first quarter results, while also announcing plans to roll out home delivery to all of its U.S. stores by year end. The company also continues to invest in omnichannel-focused supply chain initiatives, seeing a good deal of success in online/offline synergy.
“We continue to believe that blending the physical and digital channels into a seamless customer experience which we call interconnected retail provides a unique opportunity for us to expose the power of the Home Depot,” said Craig Menear, chairman, CEO and president of the company, in a call with analysts according to Seeking Alpha. “This has been and will continue to be one of the central tenets of our company strategy and we will remain committed to the investments in our interconnected capabilities.”
Part of that investment includes a new order management system, which Menear said will be implemented in all U.S. stores this year.
Concerning home delivery, Menear said the company has been seeing greater demand in some markets than expected. “This is a good problem to have, but it is challenging delivery capacity which we’re working to address,” he added.
Other omnichannel initiatives in the quarter included expanding the assortment of spring seasonal products online, and leveraging digital assets to more effectively target customers with personalized product and offer messages, as well as highlighting local in-store assortments to drive foot traffic.
Menear said Home Depot’s Synch initiative, a massive project aimed at centralizing, optimizing and speeding up its supply chain logistics, including expanding its rapid fulfillment capabilities, has been a success to date. “While Sync is in the early days of a multi-year rollout, we are pleased with our initial results,” he said. The benefits of Sync include faster inventory turns and getting products to customers in the quickest, most cost-effective manner.
The company’s supply chain investments have also positively impacted in-stock levels, inventory productivity, logistics costs and service to stores and customers, Menear said. Home Depot’s ability to fulfill buy online/ship-to-store order through its network of regional DCs leverages the company’s inventory and fulfillment channels. “The cost savings of this initiative have been above our expectations in both our ship times and customer satisfaction scores continue to improve,” he said.
Home Depot’s Q1 sales were $22.8 billion, up 9% from 2015, driven primarily by positive comp sales and the July 2015 acquisition of Interline Brands, according to Carol Tome, CFO and executive vice president of corporate services. Overall comps were up 6.5% for the quarter, and up 7.4% in the U.S. Net earnings for the first quarter were $1.8 billion, up from $1.6 billion a year ago.