Home Depot posts strong sales growth, but consumer spending unclear

On Tuesday, Home Depot reported Q4 results that topped expectations, but did not provide an outlook and said it could not predict “how consumer spending will evolve” in 2021.

Video Transcript

MYLES UDLAND: All right, let's talk quickly about Home Depot. Stock was down a little bit in pre-market trade. And I think this kind of goes to that theme of what's-- they said they're looking for, the language was, if full year trends for comp sales continue for fiscal '21, they will see flat to slightly positive comps. This coming after a year where they had 20% year-on-year comps. What's flat to slightly positive for Home Depot, probably great for you and I getting back out there to do something other than sit at home. But after such a killer year, not a huge surprise that Home Depot is not really looking for another 20% growth year like they saw in 2020.

BRIAN SOZZO: Right, Myles. And I think while you're seeing the stock perhaps not really go up much or really just a little bit under pressure downside bias, they didn't come out with guidance. They did drop, to your point, they did drop that same store sales comment at the bottom of the press release. But the company is getting dinged in some of the early analyst notes for not coming out after a real blowout year and coming out with strong guidance. Especially look, Macy's came out with guidance. And they've been falling down the drain for the past two years. And even that company has come out with guidance.

So Home Depot probably should have come out with some form of sales, operating margin, earnings per share guidance like they would normally do in normal times. Nonetheless, very strong quarter. And I think if you're a trader in this market, this is the type of quarter for Home Depot where you go thumb around, do your fundamental research on Whirlpool, do your fundamental research on a Sherman Williams, or on a Mohawk, the country's largest carpet maker. Because they put up a US same store sales increase of 25%.

That is a gain I have never seen before out of this company. It's a very strong, very strong quarter. And it would suggest that some form of momentum has at least continued in the first quarter of this year. And I suspect Home Depot will talk about that on their earnings call.

MYLES UDLAND: Yeah, I mean, for a company that size, just a ridiculous comp number to put up. But it is interesting, the stock's peak was back in August and you wonder how much that mix of, we think we've reached all our customers, we've pulled forward x amount of sales versus there are stuff we can't provide to our customers. Think about lumber. Price of lumber has gone through the roof. Did not mean to put that, but anyway, you get the pun there. Anyway, so all that stuff, I think maybe where the supply constraint part of the Home Depot home improvement cycle. And we'll see how that plays out.