Home Depot shares dropped sharply after the Atlanta-based retailer said expenses would rise by nearly $1 billion due to increasing employee compensation costs.

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For the quarter ending Nov. 1, Home Depot said it earned $3.18 a share on $33.54 billion in revenue, up 23% year-over-year. Analysts surveyed by Refinitiv expected the company to earn $3.06 a share on $32.04 billion in sales.

“The third quarter was another exceptional quarter for The Home Depot as we saw the continuation of outsized demand for home improvement projects, which has led to sales growth of more than $15 billion through the first nine months of the year,” said Home Depot CEO and Chairman Craig Menear in a statement. “Our ability to effectively adapt to this high-demand environment is a testament to both the investments we have made in the business as well as our associates’ focus on customers. We continue to lean into these investments because we believe they are critical in enabling market share growth in any economic environment. I am proud of the resilience and strength our associates have continued to demonstrate, and I would like to thank them and our supplier partners,” said Menear.

Ticker Security Last Change Change %
HD THE HOME DEPOT INC. 271.21 -8.72 -3.12%

HOME DEPOT TO RETAKE CONTROL OF HD SUPPLY HOLDINGS IN $8 BILLION DEAL

On the company’s earnings call, Menear said Home Depot had already spent $1.7 billion in benefits related to COVID-19 in 2020.

Home Depot said the average ticket per customer was $72.98 during the quarter, up 10% year-over-year, as people take on home renovation projects, especially in the U.S., which is the most impacted country in the world from the coronavirus pandemic.

The results came one quarter after the Atlanta-based company posted its strongest quarterly sales growth in almost 20 years, with revenue rising 23% year-over-year to $38.1 billion in its fiscal second quarter.

HOME DEPOT SEES SALES BOOST AS AMERICANS TAKE UP DO-IT-YOURSELF PROJECTS DURING PANDEMIC

On Monday, Home Depot, which competes with Lowe’s in the space, said it would retake control of HD Supply, a former unit that it spun off in 2007 to help shore up its stock price.

Shares were falling 2.7% to $272 a share in early Tuesday trade.

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