‘House-fixing’ boom favours Home Depot

Bloomberg

Wall Street has been predicting that the pandemic-fuelled boom in Americans fixing up their homes would fizzle as the economy reopened. But it hasn’t so far and could be entering a new phase that prolongs growth.
Home Depot Inc and Lowe’s Cos have benefited from homeowners taking on do-it-yourself projects in droves, with the retail giants combining to add roughly $55 billion in sales last year over 2019. While DIY surged, revenue from professional contractors took a back seat, which impacted Home Depot more because it gets a bigger percentage of its sales from that division.
Now the so-called “pro” business is on the mend, and investors will get a clearer sense of how much when the retailers report earnings this week. Surging home prices are convincing more people to see their homes as investments, which historically has spurred bigger renovations. Americans are also more comfortable with having workers in their homes. And there’s a huge backlog from projects being postponed during the pandemic. “We’re seeing pro sales continuing to outpace DIY,” said Jonathan Matuszewski, a retail analyst at Jefferies. Last year, there were supply chain issues and other disruptions from Covid that delayed professional projects, he added.
Throughout much of the pandemic, Lowe’s had posted higher growth rates than Home Depot because, according to analysts, it generates about three-quarters of its sales from DIYers (Home Depot gets roughly 55%). But that streak came to an end in the first quarter and is likely to continue. Home Depot is expected to increase US same-store sales, a key retail metric, 4.9%, compared to a decline of 3.3% at Lowe’s.
It’s been quite a ride for investors. Since Covid-19 upended the US economy in March 2020, Lowe’s has nearly tripled its stock price and Home Depot doubled, as both topped the performance of the broader market. Maintaining that frothiness will now hinge on courting professionals to buy materials, like lumber and piping, from them.
Under Chief Executive Officer Marvin Ellison, Lowe’s has invested in building out its pro-business. The chain added staff to help professionals, launched a loyalty program and stocked the pro section of the store with popular tools and free phone charging stations.
At Home Depot, there has been “sequential improvement” in the company’s pro-business since the start of the pandemic, CEO Craig Menear told investors at a conference June. That included the first quarter, when the professional unit outgrew DIY for the first time during Covid. The company has also been investing in this unit, including spending about $8 billion last year to acquire distributor HD Supply Holdings.
The annual growth rate of spending on home renovations and repairs will reach 8.6% by the middle of next year — topping recent gains of 5%, according to the Leading Indicator of Remodeling Activity. But there are headwinds. A rebound in travel and other types of activities means Americans have other spending options. Demand for contractors has also been high, leaving some homeowners waiting months for plumbers and electricians. And consumer confidence is taking a hit with Covid-19 resurgence in many parts of the country.

Home Depot punished staff for BLM activism, labour board alleges
Bloomberg

Home Depot Inc used threats and punishments to try to shut down employee activism about race-based harassment, including by forcing out a worker who wore a “BLM” apron, according to a complaint issued by federal labor board prosecutors.
In a filing on behalf of the general counsel of the National Labor Relations Board, a regional director of the agency accused the home-improvement retailer of selectively enforcing its dress code, which prohibits displaying “causes or political messages unrelated to workplace matters,” to target employees who wore “Black Lives Matter” apparel at work.
An employee who had been trying to address discrimination and harassment issues at a Minnesota facility, including by talking to coworkers
and sending emails, was illegally suspended and forbidden from continuing their activism, according to the
complaint.
Home Depot management also threatened employees in person and over a video call to prevent them from mounting protests against racial
harassment, according to
the filing, which was obtained by Bloomberg News via a Freedom of Information Act request.
Home Depot said in an emailed statement that the labor board “misrepresents the relevant facts” of the case, and that the company will share more with the agency as the case proceeds.
“The Home Depot does not tolerate workplace harassment of any kind and takes all reports of discrimination or harassment seriously, as we did in this case,” spokesperson Sara Gorman said.

“Regardless of the outcome, we will continue to be fully committed to diversity and respect for all people.”
Like many big U.S. companies, Home Depot put out a statement following George Floyd’s murder committing to racial justice and equality. As of 2019, Black people made up 17% of the retailer’s U.S. based workforce — a larger share than the U.S. population. About a third of managers and a quarter of U.S.-based officers were “minorities,” according to a 2020 company report.
Federal law guarantees employees the right to participate in collective action regarding workplace matters. “Issues of racial harassment directly impact the working conditions of employees,” Jennifer Hadsall, the labor board regional director who issued the complaint, said in an statement.
Absent a settlement, labor board complaints are heard by agency judges, whose rulings can be appealed to NLRB members in Washington. The agency has no authority to make companies pay punitive damages for violating the law.