Home Depot Adds Tech Jobs, Heats Up Retailers Vs. Amazon War
Zacks Investment Research | Apr 18, 2018 10:21PM ET
The Home Depot Inc. (NYSE:HD) is all set to strengthen its tech background by adding more than 1,000 employees to the technology team in 2018. This is surely going to give its peers, including Lowe’s Companies Inc. (NYSE:LOW) and the nation’s largest online retailer, Amazon (NASDAQ:AMZN) , a tough fight. Home Depot is among the few leading brick-and-mortar retailers that are making headway in the tech world to support its hold in the industry. This $207.3-billion company grew sales to a remarkable $101 billion in 2017, leaving behind arch-rival Lowe’s sales of just $68.6 billion for the year.
The home improvement biggie showed tremendous potential, with shares rising more than 21% in the past year, outperforming the the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Much of this growth can be attributed to the company’s efforts to create a balance between the physical and digital world by building interconnected capabilities.
Home Depot’s announcement to boost the tech team by more than 1,000 hires in 2018 is its biggest hiring plan so far, well supporting its $11.1-billion three-year strategic investment plan, declared in December 2017. The addition of new members will bolster the company’s already strong tech team by more than a third. It currently employs nearly 2,800 technology staff. These new hires will be mostly placed in technology centers in Atlanta, Austin and Dallas, with Atlanta attracting a larger share of the hiring. The hiring roles will mainly comprise software engineering, user experience design, network engineering and product management.
This hiring plan is likely to kick start the company’s strategic investment plan that focuses on enhancing in-store and online customer experiences, improving the supply chain and speeding up deliveries while ensuring efficient workforce management. Key targets under the plan include generating total sales of $115-120 through 2020, with a compounded annual sales growth rate of 4.5-6%; operating margin of 14.4-15%; annual average capital spending of about 2.5% of sales and return on invested capital of more than 40%. This will help Home Depot to retain its leading position in the hardware segment by enhancing customer experience and shareholder value.
Driven by its efforts to remain tech-savvy, Home Depot was recently named as one of Fast Company's 50 Most Innovative Companies. The company effectively uses technologies like cloud computing, artificial intelligence, augmented reality, big data, machine learning, and voice and visual recognition capabilities, which enabled it to augment the shopper’s experiences.
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Well, Home Depot is not the only retailer, trying to fend off Amazon’s dominance. Competitor Lowe’s is right behind with the strategy of streamlining stores portfolio. This, along with its strategy of enhancing customer shopping experience and merchandising transformation, is likely to generate incremental sales. Further, Lowe’s refurbished its pro-service business website, LowesForPros.com, to cater to the needs of its Pro-customers. Additionally, its efforts to enhance omni-channel capabilities, along with strategic acquisitions, bode well.
Though Lowe’s has been trying varied strategies to mend its business, Home Depot somehow has an edge over the latter due to its focus on information technology. In fact, even though Wal-Mart Stores Inc’s (NYSE:WMT) price-matching and discounts strategies are helping it compete head-to-head with Amazon, this has little offense to Home Depot’s solid market positioning, both online and offline.
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