Prior to the pandemic there were millions of people who commuted to work and they accepted it as normal. The commute was part of normal life. When COVID happened and public health was the most important aspect of society, the vast majority of commuters stopped commuting and stayed at home to do something including work. After a few weeks which turned into a longer period of time, vast numbers of people said I would like to change my home settings and with the money they normally spent on commuting, they started renovating. This lead to increased sales as home improvement chains and the better companies benefitted greatly.
In an article by Uday Samptah Kumar of Reuters, Home Depot said same day stores sales estimates for the first time in 2 years fell. The sales were very good, but they fell 5% from the year before.
Home Depot’s strength is the contracting market, not the Do It Yourself or DIY market, but other chains need this group for growth. As long as the housing market is doing well, Home Depot will continue to do well.
Home Depot chief financial officer Richard McPhail told Reuters that sales in the first 2 weeks of August were comparable to the second quarter, but they were not seeing any affects from the Delta virus.
Many companies want to bring employees back to the offices for a wide variety of reasons in the fall which means home renovations would likely slow anyways or the business model needs to change.
Linking to dividend paying stocks, all companies have to adapt to change, the best ones can execute when circumstances change. There usually is good reason why good companies can easily change, the issue is when the change does not come easily or they do not pivot as well as they used to, watch for the signs.
There are more questions than answers, till the next time – to raising questions.