The Home Depot Inc. (HD - Free Report) is matching steps with changing customer preference by introducing delivery capabilities at its stores and online. The company recently rolled out express delivery options for more than 20,000 qualifying items to 35 major metros across the United States. This marked a new milestone in the company’s efforts to enhance delivery service.
Home Depot’s new express delivery is capable of delivering items on the same day or the following day for a charge of $8.99 or more. Some of the cities under the company’s speedy delivery radius are Atlanta, Austin, Birmingham, Boston, Charlotte, Chicago, Dallas, Houston, Nashville, Seattle and Washington DC.
As part of the recent expansion, the company has tied up with car and van providers like Roadie and Deliv to deliver smaller items. Alongside, it is working to expand its supply chain network and distribution facilities for enhanced delivery of bulk products. The company plans to bolster the delivery speed and reach by adding direct fulfillment centers and more than 100 distribution sites to its supply chain system.
Apart from being incremental to overall sales, we believe these extensions will also contribute significantly to boost sales during the ensuing holiday season.
While the news did not have much impetus on Home Depot’s share price movement, the stock has improved 2.7% in the past month. Though this reflects close parity with the industry’s growth of 3.3%, it marks an outperformance against the broader sector’s decline of 0.3%.
The newly launched service forms part of Home Depot’s previously announced five-year plan to expand delivery options for DIY and Pro customers. Evidently, in June, the company revealed plans to invest about $1.2 billion in the next five years to boost delivery capabilities, including the expansion of supply chain networks and speeding up deliveries.
Home Depot’s five-year supply-chain transformation plan, under the “One Home Depot Supply Chain” initiative, was also marked by the introduction of its first supply-chain facility (market delivery operations) in the first quarter of fiscal 2018. These are stockless locations, acting as delivery hubs for big and bulky products. The company plans to open more of these facilities in the second half of fiscal 2018.
Analysts revealed that the company targets reaching about 90% of the population through deliveries on the same day or the next day. Its aggressive efforts to enhance delivery capabilities is in sync with the retail industry trends, where customers are demanding immediate delivery of products ordered over the web and through mobile apps.
Rightly, Home Depot’s integrated retail strategy is not only on track to bridge the gap between online and offline channels but also focuses on extending the supply-chain system, and enhancing delivery and fulfillment options. Driven by the company’s efforts to remodel online shopping experience, it witnessed about 26% growth in digital sales in second-quarter fiscal 2018.
Backed by a robust plan, the company seems on track to reach long-term financial targets of growing total sales to $115-$120 billion, with compounded annual sales growth of nearly 4.5-6% by 2020. Further, it estimates return on invested capital target to be more than 40%. Alongside achieving these targets, this Zacks Rank #3 (Hold) company plans to accelerate investments in the next three years to enhance customer experience and shareholder value.
Looking for Favorable Investment Options? Check These
Some better-ranked stocks in the retail sector are Shoe Carnival (SCVL - Free Report) , Tecnoglass Inc. (TGLS - Free Report) and Canada Goose Holdings Inc. (GOOS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shoe Carnival has pulled off an average positive earnings surprise of 26.1% in the last four quarters. The stock has rallied 41.4% year to date.
Tecnoglass, with an impressive earnings growth rate of 20%, has delivered an average positive earnings surprise of 16.5% in the trailing four quarters.
Canada Goose has long-term earnings growth rate of 26.3%. Further, the company’s earnings have outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 73.1%.
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