Large Retailers Scramble to Keep Up in New Digital Sales Environment While Nimble Adaptive Companies Shine

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Home Depot Inc. reported a 22% increase in online sales for its third fiscal quarter ended November 3, though it didn’t do the breakdown of the exact figures. However, some of its online investments are taking a bit longer than they thought to pay off.

These e-commerce investments are part of the $5.4 billion One Home Depot program announced in 2017 that increases the company’s omnichannel performance. The program was expected to deliver one percentage point to total growth for the quarter, but only produced half that because the investments had yet to go into effect, Home Depot CEO Menear said to a group of Seeking Alpha analysts. Home Depot’s revenue grew 3.4% in total to $27.2 billion from $26.3 billion for the quarter. For the year so far, growth hit 3.3% to $84.4 billion from $81.7 billion.

While there was a big miss this quarter for Home Depot, Menear predicts that growth will accelerate as these investments roll out. He believes the coming quarters will make up for the rough start.

In other news, these are the earnings reported for some other major retailers:

  • Home Depot competitor Lowe’s Cos. Inc. is moving to Google Cloud, which the company said will increase stability, allow for more personalization and make it easier to add SKUs to the site. The hardware chain said the revamping of its web business will slow online growth in the short term. In the upcoming quarter, the company expects same-store sales to grow about 3%, and its web business will contribute almost nothing to that. Lowe’s didn’t break out ecommerce sales, but for the third fiscal quarter ended Nov. 1, revenue was down 0.2% to $17.39 billion from $17.42 billion during the same period last year. Year to date, revenue is up nearly a percent to $56.12 billion from $55.66 billion.

 

  • Department store chain Kohl’s Corp. reported ecommerce growth in the “mid-teens” for the third fiscal quarter ended Nov. 2, according to CEO Michelle Gass on an earnings call transcribed by Seeking Alpha. Increases in sales via mobile devices drove the growth, Gass said, particularly from the Kohl’s app. Also, while women’s apparel underperformed overall, it outperformed expectations online thanks to new brand availability, Gass said.

 

  • Apparel chain Urban Outfitters Inc. said the threat of tariffs forced it to receive items early from suppliers last quarter, contributing to an 18% jump in its inventory on the books for the third fiscal quarter ended Oct. 31. The increase, by $79.9 million, was part of a disappointing quarter, with flat sales in stores open more than a year in the U.S. company’s flagship chain. Digital sales increased by double digits, but the retailer did not provide exact figures. Revenue from its subscription service Nuuly, launched this summer, topped $2 million. However, the retailer blamed higher logistics costs associated with online orders for the 28.1% decline in net income to $55.7 million from $77.5 million for the same period last year. Overall revenue for the quarter was up 1.4% to $987.5 million from $973.5 million the year before. For the year so far, sales are down 0.4% to $2.81 billion from $2.82 billion at the same point last year.

 

While these massive one-stop shops for certain items like – in the case of Home Depot – home improvement items were once a major hit for shoppers, the online marketplace has been difficult to adapt to, undeniably.

However, I think CEOs of major retailers are putting in the leg work to figure out how they can continue offering great service in person and still reach consumers at home who would prefer to do their shopping online.

We feel that as an affiliate marketing agency, our expertise allows the companies we work with to become more nimble by giving them the option to cut costs and increase revenue through robust affiliate strategies. We look forward to a more connected digital world where the best product wins.

Gone are the days of behemoth-built brick and mortar locations that monopolize the sales. We like the idea of leveling the playing field for clients of all shapes and sizes.

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