Home Depot profit drops on crisis costs

Home Depot profit drops on crisis costs

Home Depot's quarterly profit fell and missed estimates Tuesday, as the home improvement chain spent about $850 million on benefits for employees keeping its stores and warehouses running through the COVID-19 pandemic.

Fred Katayama reports.

Consumers lined up to buy cleaning supplies, hardware, and other home improvement goods amid the lockdowns, but higher employee costs hammered Home Depot's bottom line.

Quarterly profit dropped nearly 11% and missed Wall Street's targets.

The company had to double overtime pay, add more hours of paid time-off, and fork out additional bonuses for risks posed to staff working through the crisis.

It spent $850 million on benefits for employees who kept its stores and warehouses running.

The uncertainties posed by the pandemic also forced the retailer to scrap its full-year outlook.

That sent its shares lower in early trading Tuesday, dragging down the Dow.

On the plus side: the company experienced strong quarterly sales.

Stay-at-home restrictions and government stimulus checks drove people to spend more money on tools for do-it-yourself home projects and stockpile cleaning supplies.

But spending on home improvement could fall this year.

The company relies heavily on a solid housing market to drive sales.

Home building activity collapsed in March as lockdowns battered the economy and people lost jobs.