Home Depot sales rise 7% but higher coronavirus-related costs drag down earnings

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Home Depot is set to report its first-quarter earnings before the bell on Tuesday. While coronavirus restrictions have slowed or suspended construction in much of the country, Home Depot’s earnings will offer insight into the demand for do-it-yourself projects, kitchen appliances and gardening supplies as many Americans stay at home.

Wall Street is anticipating earnings per share of $2.27 on revenue of $27.54 billion, based on Refinitiv consensus estimates. Same-store sales are expected to grow by 4.4%, based on StreetAccount estimates. However, it’s difficult to compare reported earnings with analyst estimates for Home Depot’s first quarter, as the coronavirus pandemic changes customers’ shopping patterns and adds additional labor and safety costs for companies.

Home Depot has had a few advantages going into the pandemic compared to other retailers. It’s been deemed an essential retailer in most states, so its stores have remained open. It’s invested in e-commerce and online offerings, such as curbside pickup. And spring is historically the busiest time of the year for the home improvement industry.

The Atlanta-based retailer previously said it planned to invest $3.9 billion in 2020 toward further integrating its online business with its traditional stores. The year is set to be the peak of an $11 billion, three-year investment in the effort. The investments have helped Home Depot to shorten delivery time and develop a more user-friendly website. It’s also sought to streamline curbside pickup with automated lockers for customers.

The company previously said it would hire 80,000 additional employees, with many part-time hires staffing its garden center, on par with spring hiring in recent years despite disruption from the coronavirus pandemic. 

However, the company has said it canceled major spring season promotions that drive foot traffic to stores, such as Black Friday-like events. It also has been enforcing social distancing in its stores, and it distributed thermometers to employees who work in stores and distribution centers so they can monitor their temperatures.

—CNBC’s Melissa Repko contributed to this report.

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