The 2020 Mid-Year Economic Update_long

HD Supply: ‘Better at What We Can Control’

Distributor overcomes negative impact of weather, foreign exchange to grow sales, profit in 1Q.

Despite negative impacts from weather and foreign currency exchange, HD Supply continued to grow its sales and profit in the first quarter ended May 3. The distributor recorded profit of $242 million in the term, up from a loss of $12 million.

The company estimates that 180 branch days faced full or partial closings during the quarter due to weather, with the Waterworks business seeing the broadest impact. "Snow, below-freezing temperatures, rain and mud are not conducive to underground activity," said Joe DeAngelo, president and CEO, in a call to discuss the first quarter results.

Foreign exchange rates adversely affected the Power Solutions business by about $6 million in the quarter – or 1 percent of sales growth.

"We can't control our markets and environment," DeAngelo said. "But we believe we have differentiated scaled positions in growth markets with proven execution strategies. … In every instance, we're focused on getting better at what we can control."

For example, while Amazon continues to "make noise" in the space, HD Supply can focus on building its own digital presence and expertise. "We're very confident that our plan of being able to digitally enhance our knowledgeable associates is a strong moat builder versus Amazon, which is pushing products," DeAngelo said.

The digital element may not translate into better margins, DeAngelo said, as it requires continued investment in the platform. But it extends the way of doing business with customers, which is critical to HD Supply's market position.

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