Investors Believe Home Depot Can Compete With Amazon

Home Depot

As shares of Home Depot have risen with the coming of spring, some investors are bullish on the chain and believe it can compete with online retailers such as Amazon. The company’s stock has risen more than 10 percent since the beginning of April, outpacing the S&P 500 Retailing index, Reuters reported.

Some investors contend that consumers will want to head to brick-and-mortar stores to purchase supplies for projects around the house. Home Depot is also popular with contractors, and this has helped the chain perform better than its competitors at Lowe’s Companies. The improving weather helps Home Depot’s business, too, as more consumers are getting their homes and outdoor spaces ready for summer months.

“It’s the season where contractors start getting busy,” said Bruderman Asset Management’s chief market strategist, Oliver Pursche. “That bodes well for Home Depot and similar companies.”

In an interview with TheStreet, Home Depot’s chief financial officer, Carol Tomé, said she believes the company is safe against the power of Amazon. Tomé revealed that Home Depot saw a 21.5 percent sales growth in online sales last year, and that its online business now makes up 6.9 percent of its overall business. In addition, 46 percent of those sales were picked up inside of a store, which often resulted in the customer purchasing additional products.

Tomé also pointed out that the home improvement giant is “not an item retailer. We are a project retailer. That is very different than selling consumable items. It’s just different. We also help you when you have a problem. If your bathroom is leaking water, that’s a very different need than if you are trying to match a sweater to your eye color. And then housing is a good asset class. So, do we have an Amazon-protected moat around our business? Of course not. But do we have barrier islands around our business? Yes, we do. Our job is to continue to invest in those barrier islands.”


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.