Home Depot Still Feeling Chill of Winter

Home Depot

Home Depot Still Feeling Chill of Winter
| Published May 20, 2014 |

By Thursday Review staff

The effects of Polar Vortex and a harsh, prolonged winter are still being felt by some retailers and in some parts of the economy.

Home improvement giant The Home Depot announced this week that its sales for both the first and second quarters were slower than expected. The first quarter slump was expected, and reflected a trend nationally as severe cold, heavy snow and ice inhibited home and auto sales, limited shipping and transportation, shut down factory output, and kept many millions of consumers locked indoors.

But the second quarter is already looking sluggish for Home Depot, in part because new home construction has not accelerated as the experts has expected, and because sales of existing homes are also lagging behind the predictions of many market analysts. Home Depot’s spokespersons said, however, that its sales in areas not affected by the severe weather were either on target or better than expected.

This disparity between the areas slammed by winter’s wrath and those areas least affected is a stark reminder, economists says, of just how long we will continue to feel the impact of those three consecutive months of record-breaking cold.

Most economists and analysts, especially those who look closely at housing, real estate, home construction and home repairs, had been confident that spring would unleash pent-up consumer desire—especially as home sales began to show some signs of improvement last year. The severe winter had brought new home construction to a halt, and in at least 35 states snow and ice forced even minor home repairs into a slump. Home repair contractors and vendors stayed out of Home Depot. The resulting mini-recession may have also kept home owners from their usual early spring tasks: spring cleaning, painting, gardening, lawn care and outdoor work—an important source of income for Home Depot.

Atlanta-based Home Depot is the world’s largest home improvement retailer, with more than 2200 stores in the United States, Canada, Mexico, and several Caribbean nations. Home Depot also owns a dozen stores in China, and has long been rumored to be interested in expanding into the United Kingdom.

Home Depot’s closest competitor is Lowe’s, but Home Depot generally outperforms Lowe’s in total sales nationally. Like many retailers, Home Depot suffered during the Great Recession of 2008-2010. It faced huge losses, closed 54 stores, and was forced to lay off more than two thousand employees. The end of the recession brought some new stores and more employment.

Home Depot was founded in 1978, and its first stores were developed in spaces leased from former J.C. Penney locations in the Atlanta area. After the company grew quickly in the 1980s, Home Depot moved its headquarters to Paces Ferry Road near Interstate 285 in suburban Atlanta.

Related Thursday Review articles:

Home Construction and Sales Down; Thursday Review; March 25, 2014.

Polar Vortex Economy: Losers, Winners; Thursday Review; February 2, 2014.