Brush With Success

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What's going on?

Home Depot announced better-than-expected earnings on Tuesday, but investors arent sure the home improvement retailers winning streak can last.

What does this mean?

Between rising real estate prices and the sheer amount of time everyone has on their hands, home improvement is where the heart is. And that suits Home Depot whose sales growth is still higher than it was before the pandemic just fine.



But it might prove a double-edged sword, with the companys next few earnings updates at risk of falling short of the high bar it set for itself last year. And thats to say nothing of the stiff competition ahead for shoppers dollars, when the vaccine rollout leaves DIY projects secondary to out-of-home experiences. Thats making investors nervous that Home Depots pandemic gains wont hang around, which might be why they initially sent the retailers shares down.

Why should I care?

For markets: A diverse DIY business is a happy DIY business.


At least Home Depot might benefit from the resurgence in sales to plumbers, builders, and electricians, all of whom are more likely to be invited into folks homes when vaccines are in full effect. And this is where Home Depot has the edge over close rival Lowes: 45% of the formers sales come from professionals, compared to the latters 25%.



The bigger picture: Department stores are back, baby.


Some retailers are already seeing the return to pre-pandemic spending in action: Macys, for one, just delivered its first profitable quarter in a year. And there are other signs of life for department stores, with new data showing that January saw the sectors first sales bump since 2019. Macys even reckons its own sales could grow by 20% this year an encouraging sign, if still 13% below the companys pre-pandemic target for last year’s sales.

Originally posted as part of the Finimize daily email.

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