The Home Depot, Inc. ((NYSE:HD), the world’s largest home improvement retailer, today announced Q1 2014 financial results. In connection with this, Frank Blake, the company’s CEO discussed the earnings results in more detail in a conference call conducted earlier today. Below is the full commentary by the CEO…
Thank you, Diane, and good morning everyone. Sales for the first quarter were $19.7 billion, up 2.9% from last year. Comp sales were positive 2.6% and our diluted earnings per share were a dollar. Our U.S. stores had a positive comp of 3.3%.
Our sales for the quarter were below our expectations. In 2013, we experienced a delayed spring in the U.S. and Canada and we expected more normal weather for this spring. Instead, much of the U.S. and Canada had an even colder spring and this had a significant impact on our sales.
In previous years, we’ve talked about the bathtub effect that weather can have on our spring seasonal business, where weak sales in the first quarter are counterbalanced by strength in the seasonal business in the second quarter. We expect the same effect to be true this year.
As we look at the performance of our business in the first quarter, the strength in the areas of the country where more normal weather existed supports this outlook.
In the U.S., as Craig will discuss, our northern division, our largest division negatively comped, driven by weakness in seasonal and outdoor categories, but in our southern and western divisions we not only positive comped, but we actually did better than we expected.
There has been a fair amount of discussion about the fact that many indicators in the housing market have softened over the last several months, leading to the question of whether this indicates that the housing recovery has run out of steam. As we parsed the data from our own business, that is not what we see.
The core categories in the store remained strong, pro-sales continued to grow. Our services business grew high single-digits in the quarter and we had another quarter of big ticket growth. And our fundamental view on the recovery and the home improvement market has not changed. We didn’t expect the recovery in 2014 to be as dramatic as last year’s, but we continue to believe that home price appreciation, affordability and an aging housing stock in need of investment will continue to drive growth.
On the international side, our Canadian business posted a positive comp in local currency for the quarter. In Mexico, our team posted their 42nd consecutive quarter of positive comps. They also inaugurated an online e-commerce site piloting it now in limited geographies, but eventually planning for coverage across the country.
The power of interconnected retail and the opportunities it creates for us are now becoming apparent throughout North America, Canada, Mexico as well as the U.S. And we are pleased that as we invest in this area, we are seeing a positive response from our customers as indicated by improving customer satisfaction surveys and by our sales results.
Our dotcom business had sales growth of almost 40% for the quarter. We are consistently seeing over 3 million visits per day and our conversion rate continues to increase. Also our dotcom presence was a contributing factor to our transaction of growth.
As Carol will detail, we are reaffirming our sales guidance and increasing our earnings per share guidance for the year to reflect the benefit associated with the sale of a portion of our equity position in HD supply.
Let me close by thanking our associates for their hard work and dedication with a special thank you to all of our associates, who have helped communities in need throughout the country as they deal with floods, tornados, and fires.
Based on this quarter’s results, over 90% of our stores would be eligible for success sharing, our profit sharing program for our hourly associates. We are proud of this result, and look forward to improve on it in the second quarter.