Even though it posted record results in its second-quarter earnings, Home Depot’s stock is still tanking on the market, according to a CNBC article by Bob Pisani.
The main culprit behind the drop is the same company that’s threatening most markets: Amazon.
Going into the earnings day, economists were positive on the home improvement store’s immunity to Amazon and that it has “clear advantages with the Do-It-Yourself and professional contracting crowd that is the core of its buyers,” the article noted.
According to the home improvement store’s earnings release, sales surged to $28.1 billion for the second quarter of fiscal 2017, a 6.2% increase from the second quarter of fiscal 2016.
“We were pleased with our results this quarter as our customers rewarded us with the highest quarterly sales in company history,” said Craig Menear, chairman, CEO and president, said about the report.
“We also achieved the highest quarterly net earnings in company history,” said Menear.
But it wasn’t enough to stop the store’s stock from dropping more than 3%.
From the article:
Simply put, continuing fears of the "Amazonification" of retail is hitting the sector hard today, and Home Depot—long considered immune from the Amazon effect—is getting swept up in the worries.
But wait a minute—isn't Home Depot supposed to be relatively "safe" from Amazon? Alan Rifkin from BTIG said a few weeks ago that he thought the agreement to sell Kenmore (Sears) appliances through Amazon were "overblown" and that Home Depot had a significantly more robust product lineup than Amazon.
Still, that confidence is eroding somewhat. Widlitz noted that auto parts were also considered "safe" from Amazon not so long ago, and are no longer considered so: "We have to ask the question with Home Depot, particularly as Kenmore is now selling appliances online that are now smart appliances, is this sector safe as well?"
Home Depot isn’t the only company that’s Amazon is striking fear into. In fact, Amazon is causing more fear in corporate America than the Trump administration, according to an article in Bloomberg by Julie Verhage. And the housing market is no exception to this.
The online shopping giant is pushing its way into other top industries, striking fear into executives that never viewed Amazon as their competition.
