Home Depot misses profit estimates after handing out virus-related bonuses

(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{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} this year, dropped nearly 3{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} 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{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} to $28.26 billion, beating estimates of $27.54 billion.

The company also declared a first-quarter cash dividend of $1.50 per share.