Home Depot chairman and CEO Frank Blake, keynote speaker at the Cobb Chamber of Commerce breakfast Monday, said the retail giant is exceeding growth expectations, which is a sign that the housing market is back.
Home Depot for the second quarter compared to 2012 saw the largest sales growth in same-store sales the company’s had in more than 20 years, he said.
“It is a sign of the housing market coming back,” Blake said. “But to give you a perspective on just the size and power of the company that Bernie Marcus and Arthur Blank founded just slightly over 30 years ago, in three months of the second quarter of this year, our business grew $2 billion. That’s pretty amazing.”
Blake anticipates the market will continue to recover based on what’s happening in areas of the country hit hardest by the downturn, such as Florida, California and Arizona.
“It’s home price appreciation, so people, their houses are getting out of negative equity situations, and so people are willing to invest in their homes again,” he said.
A headwind to the recovery is that it continues to be difficult for families to get credit, particularly for new homeowners.
“As part of the correction to the crash there are very strict standards around mortgages and how much of a down payment you have to make and the (credit) score you need to get loans, and so it’s much harder to qualify for mortgages now,” he said. “Particularly for the first-time homebuyer, you’re seeing a lot of the younger generation that have significant student debt, and so you’re actually seeing a slowdown in sort of that early first-time homebuyer.”
Blake said much of the retailer’s growth is coming in the form of online sales, which spiked more than 50 percent in the third quarter.
“People, they want the comfort of shopping in their home, being able to pick up in the store, being able to return in the store, the breadth of selection online. We’re seeing big growth online,” he said.
The shale oil boom in North Dakota has allowed the retailer to open a new store in that state next month. There are also plans to open stores in Mexico.
“But you know, the new store growth is not the significant part of our growth stream. It’s mostly online and in-store,” he said.
Among those at the breakfast, held at the Cobb Galleria Centre, was county chairman Tim Lee, who said he was grateful that Home Depot’s corporate headquarters are in the county within the Cumberland Community Improvement District.
“Where Home Depot goes, so does the economy,” Lee said. “The stronger their sales are, it’s a good indicator as to where the economy is going overall, as people use more discretionary income for home improvement, and it’s also an indication that the building market, new homes, is starting to come back and show signs of improvement, which for our area specifically is a catalyst for economic growth. Combining their strength with the recent news of economic development in Cobb County (the Atlanta Braves moving here) the future looks bright for Cobb.”
Blake touched on the community service of Home Depot, such as the $80 million the retailer’s foundation committed to nonprofits dedicated to improving the homes of veterans.
Every year from Sept. 11 to Nov. 11, the company also makes a concentrated effort to serve its communities. This past eight-week span saw more than 350 projects to help veterans completed.
“Many of these projects are right here in Cobb County, from performing critical home repairs to building wheelchair ramps to refurbishing transitional housing for formerly homeless veterans,” Blake said.
(Reprinted from the Marietta Daily Journal. Written by Jon Gillooly, December 02, 2013. Read more: The Marietta Daily Journal – Home Depot CEO Company growing market recovering)