The logo of U.S. home improvement chain Home Depot is seen after the Mexican trade union Revolutionary Confederation of Laborers and Farmworkers (CROC) accused Home Depot of blocking union activity, in Mexico City, Mexico January 15, 2020. REUTERS/Luis Cortes
(Reuters) – Home Depot Inc (HD.N) missed estimates for quarterly profit on Tuesday, as the home improvement chain spent heavily to compensate employees working at its stores during the COVID-19 pandemic.
Shares of Home Depot, which have gained 12.4% this year, dropped nearly 3% to $238.50 in premarket trading, as the company also scrapped its full-year outlook, citing uncertainties stemming from the pandemic.
Home Depot said it incurred about $850 million of pre-tax expenses in the first quarter, as it provided additional bonuses, doubled pay for overtime and added more hours of paid time-off for employees working during a surge of panic buying of cleaning supplies and masks.
The company’s net earnings fell to $2.25 billion, or $2.08 per share, in the first quarter ended May 3, from $2.51 billion, or $2.27 per share, a year earlier, as it spent heavily to compensate its store employees working during the health crisis.
Analysts had expected earnings of $2.27 per share, according to IBES data from Refinitiv.
Total net sales rose to 7.1% to $28.26 billion, beating estimates of $27.54 billion.
The company also declared a first-quarter cash dividend of $1.50 per share.