Home Depot Earnings Call Insights: Sales Outlook For H2 and Second-Look Program
Home Depot, Inc. (NYSE:HD) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Sales Outlook For H2
Gary Balter – Credit Suisse: Carol, just following up on your comments near the end, you sounded more confident. What causes – obviously the results should cause that confidence, but what causes that confidence going forward? What do you think competitively in terms of pricing or anything on those lines as gross margin look solid given this shift in mix?
Carol B. Tome – EVP, Corporate Services and CFO: We look at a number of factors, both internal and external to arrive at a point of view as to how our sales will perform in the back half of the year coming off obviously a very strong first half of the year. The best thing we can look at are current trends, and I will tell you the current trend of the business is good; sales are quite brisk. Now competitively, Craig, you might want to comment.
Craig Menear – EVP, Merchandising: Yeah, Gary, from a competitive standpoint, we saw the last quarter that we just exited here, pretty comparable. Most folks went hard after the seasonal business given the late start to the business and certainly in big ticket; it appears we still need to stimulate the customer to buy, but not a radical change and, kind of, would expect that going forward.
Gary Balter – Credit Suisse: There’s been a lot of talk – and then I’ll get off the phone – there’s been a lot of talk of interest rates rising and the impact that could have on housing and you guys et cetera, what are your thoughts on where we are?
Carol B. Tome – EVP, Corporate Services and CFO: Well, as you know, 30-year mortgage rates are up. They are at the highest-rates that they’ve been since October of 2011 at about 4.4%. The affordability index is still at a historical high, Gary. So if the rates were to move up, it would impede that affordability index, but we’ve got a long way to go before it should have a dramatic impact we believe for mortgage availability or the attractiveness to a consumer or homeowner to take out a mortgage. All that being said, however, we’re watching it.