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HD Supply Invests in 'Customer-Centric Digital Vision'

HD Supply's investment in e-commerce is paying dividends. Online sales now represent about 60 percent of orders, up 5 percentage points versus prior year, the result of a "multiyear, customer-centric digital vision," CEO Joe DeAngelo told analysts on this week's earnings call.

"We made significant investments in our digital foundation across all areas of the business as well as the customer’s daily e-experience," DeAngelo said.

HD Supply reported sales for 2016 of $7.4 billion, an increase of 4.4 percent year-over-year, though its annual profit of $196 million was down significantly from $1.5 billion in 2015. But the company remains upbeat that investments across all aspects of the business – from e-commerce to supply chain to marketing – will grow the bottom line.

"We initiated a series of multifaceted initiatives across our supply chain to improve processes that will enhance our ability to consistently deliver on our associate, customer and shareholder promises," DeAngelo said. "We improved critical merchandising and marketing processes to reduce cycle time and simultaneously improve the impact of the output."

HD Supply also remains upbeat on potential infrastructure investments, something DeAngelo began discussing late last year when he cited the "significant amount of speculation regarding increased infrastructure investment" in the first year of the Trump administration.

DeAngelo said the company was cautiously optimistic for the opportunities that might arise, and that "HD Supply Waterworks and construction and industrial are very well positioned to benefit from incremental infrastructure spending."

Those expectations have been tempered somewhat, according to DeAngelo's latest comments following the 2016 earnings report. But he said the company remains "optimistic about the focus on U.S. infrastructure investments. We expect the progress to be slow in 2017 as the new administration finalizes the approach, but believe that inflows of funds could begin in 2018 and represent multiyear project opportunities across the country for which the team is well positioned to benefit."

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