Specialist
Former VP at The Home Depot Inc
Agenda
- Home Depot's (NYSE: HD) professional services segment and demand outlook given US housing market macroeconomic trends and interest rates
- Home Depot's merchandising strategies as consumers potentially seek to trade down
- Competitive landscape overview and channel dynamics vs players such as Lowe’s (NYSE: LOW)
- Medium-to-long-term outlook
Questions
1.
What 2-3 significant trends would you highlight as most relevant for the home product and service retailer space? What are the market fundamentals underlying Home Depot?
2.
How do the volatilities in the housing market impact demand for single- and multi-family home builds? What are the implications of that for the pro service business at Home Depot?
3.
A strong backlog of commercial projects have been built up for Home Depot and its peers coming off the strong demand rebound during the pandemic. How long do you see that carrying the company going forward into 2023?
4.
What potential shift in dollar share could we see between pro services and DIY in the next 6-12 months?
5.
What CAPEX investments in Home Depot’s pros business are you most optimistic about in terms of estimated ROIs, considering the enhancement of digital channels and specific loyalty programmes?
6.
What are your thoughts on Home Depot’s competitive moat, specifically online against players such as Lowe’s and Amazon, across omnichannel, digital advertising and fulfilment capabilities?
7.
What markets will be under-penetrated or most promising commercially in the next 1-2 years for Home Depot?
8.
What 2-3 significant risk factors for Home Depot’s business are important to note in the near term? You mentioned labour as a growth constraint.
9.
Home Depot’s leadership did talk about a positive tailwind being the shortage of skilled labourers and investments it has made to connect consumers to direct skilled tradesmen. What is the market opportunity for that, and is there another competitor doing something similar?
10.
Home Depot’s leadership noted that the market is coming to an inflection point in 2025 where, considering the ageing of housing in the US on average, it will see a considerable uptick in repair and remodelling. Would you agree with that sentiment, and would you say that’s in line with what is trending in the market?
11.
How do you see product mix shifting in DIY to address consumers’ concerns surrounding persistent inflation and rising interest rates? What key subcategories come into focus here?
12.
Regarding how ticket prices could be trending into 2023, we did see inflation relax a little. What will be the KPIs to watch going forward, and how do you see Home Depot approaching pricing and volume?
13.
Could you talk about the seasonality of Home Depot’s business? How does that relate to what we could see in terms of SG&A and marketing promotions?
14.
What specific price elasticities and promotional activities could there be between digital and physical channels? Is there significant price differential between online and physical for the same items or subcategories, or typically is it ideal to hold those to the same price point?
15.
How well does Home Depot do in private label vs competitors such as Lowe’s?
16.
What are your thoughts on product innovations? What can Home Depot do to continue to drive higher ticket prices organically and get consumers to trade up?
17.
What is your assessment of inventory dynamics in the space and the respective positions of Home Depot vs Lowe’s? What are your thoughts on supply chain conditions?
18.
An interesting question that comes up is the proportion of pro services inventory vs DIY inventory and actual merchandise in stores. What do you think of the market and its trends? What is most likely the case?
19.
What is Home Depot’s positioning within its value chain of fulfilment, considering CAPEX and investment driven by supply chain headwinds over the past 1-2 years? What challenges does the company continue to face and should continue to address for further investment?
20.
What is your 6-12-month outlook for Home Depot’s top-line performance and margin contribution?
21.
Which customer segments will be driving the most growth for Home Depot over the next 6-12 months?
22.
Something I thought was surprising is that Lowe’s still saw consumers trading up as far as ticket prices go. What might be the cause of that, or do you think this is just more of a blip in the overall picture in the next 6-12 months?
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