On August 17 Home Depot Inc. (NYSE:HD) released its second quarter earnings for 2017. The board of directors approved a quarterly dividend of $0.89 per share representing a 2.41% dividend yield. Sales grew to $28.1 billion, which was a 6.2% increase from the second quarter of 2016. Net earnings increased to $2.7 billion or $2.25 per diluted share. The surge in sales was driven by a big boost in American spending on housing improvements, as well as an extended spring season which helped garden departments.
How did investors respond to this record earnings report? Home Depot stock fell 3%, and it has dropped another 3% over the past week dating to the noon hour of August 23. Concerns were driven by the e-commerce retail giant Amazon.com. Inc (NASDAQ:AMZN), which is branching out to offer smaller home inventories at lower prices online. This has led some to believe that Home Depot sales are about to plateau, and they will be yet another victim of the online retailing giant.
Housing starts have also begun to decline which will eat into Home Depot’s profits. The stock price also benefited from an aggressive share buyback program which may have recently popped leading to the 5% decline seen since mid-June. Home Depot will need to work on building a network to compete with Amazon to avoid slipping as other major conventional retailers have.