Home Depot CFO says home improvement conditions over medium term ‘have never been this attractive’

By Sam Boughedda

Home Depot (NYSE:) CFO Richard McPhail said Thursday that the conditions for home improvement over the medium to long term “have never been this attractive.”

Speaking at the JP Morgan Retail Round-Up Conference, McPhail stated that he believes home improvement is one of the most enduring healthy sectors of the consumer economy in North America, with the buildup of housing wealth providing a strong environment for the home improvement sector.

While Home Depot assumes consumer spending in 2023 will be flat and the shift from goods to services is going to put more pressure on the market, McPhail feels that Home Depot’s history of taking market share will continue in 2023.

“Home Depot has a long history of taking market share in any environment,” he commented. “We intend to do that again in 2023. And so that’s why we’ve said that any pressure from those 2 dynamics is going to be offset by our ability to take share.”

In addition, the company is confident that they have better conditions among its customers than other sectors of the consumer economy, with project demand for improving homes providing a boost.

“Our customer is the homeowner. And the homeowner has seen, again, just an inflation in their balance sheet that they never anticipated,” McPhail added. “They have jobs. They’ve seen income gains. And so our customer is just, on a relative basis, doing very well.”

Answering a question on Home Depot’s appetite for M&A, the Home Depot executive explained that the firm always looks at “buy versus build” and that M&A could always be a part of the company’s strategy to get them where they want to go.

“We have made acquisitions over time that have been small from a P&L perspective, but extremely important from an overall enterprise perspective, acquisitions of data science companies that have allowed us to price in a smarter way,” he said.

“And so it will always be a part — an option for us, but it’s always a buy-versus-build decision.”