According to the CEO of Home Depot, the fear that the housing market may be weakened by possible mortgage interest provisions in a forthcoming tax bill is "exaggerated."
A strong real estate market has helped boost Home Depot's record career.As recently as on Monday, the retailer's stock reached a new historical record as sales and the profit has been strong. s decisions with your business, but investors still closely monitor the housing market.
Home Depot stressed that it will benefit from a lower corporate tax rate. For its most recent fiscal year, it paid an effective tax rate of 36.3 percent.
"With the tax reform, Home Depot would have an immediate and significant benefit to our tax rate, we are in favor of tax reform, if it is put in" In a note to investors, Deutsche Bank analyst Mike Baker He said that if the corporate rate is reduced to that of investors, Deutsche Bank analyst Mike Baker said that if the corporate rate falls to a higher level than before, we all agree, "said Menear.
] 20 percent, as currently considered, "Home Depot's earning power increases by at least 20 percent."
At an investor meeting on Wednesday, the company described its three-year financial plan, earnings and sales forecasts.
Depot expects sales to grow between 4.5 and 6 percent to between $ 115 billion and $ 120 billion, with a resulting operating margin of between 14.4 and 15 percent, and also announced a new repurchase plan. of shares of $ 15 mi l million. Both the earnings and the sales expectations did not reach the consensus of the analysts.
The retailer plans to invest $ 4.5 billion over the next three years to improve its stores, pay more to workers, build a new website for professionals and improve its supply chain, delivery and product innovation.
While Home Depot has been "incredibly lucky and blessed with great performance" over the past few years, it has to do more to catch up with consumer expectations, Menear said.
While 45 percent of Home Depot's online orders are picked up at its more than 2,280 stores, said Menear, the retailer is still not where it wants to shoppers.
"We are accelerating the pace of investment to really create the & # 39; Home Depot & # 39 ;. experience" because our customers are combining the physical and digital world, and that is frankly, not how we were created. We have to be that for them, "he said.
Menear added, some of the initiatives include shortening the typical two-day delivery window the next day and the same day, and adding self-service lockers in the store for picking up orders. Online
Home Depot shares traded lower on Wednesday as investors were disappointed with the financial targets, hoping for more The stock has risen 35 percent so far this year.
However, analysts note that the world's largest home improvement retailer has a conservative history of orientation, and the company's financial director, Carol Tome, pointed out during the meeting that Home Depot exceeded or surpassed its forecast every year since 2009.
"This is a substantial increase in investment and we want to make sure that we are delivering the same high level of execution that we have been able to offer", d I joke to CNBC. "I do not know if it would be wise for us to go much further than that, because of our conservative nature."