A natural disaster is not good news, not even if you are in the business of providing supplies for building and repairing homes.
Of course, that doesn’t mean that Home Depot isn’t selling an awful lot of stuff in the Texas, Florida and Georgia cities that were just pounded by storms. And it doesn’t mean that Wall Street investors won’t notice there’s money to be made.
Which could be why shares of the home improvement giant rose from $148.25 on Aug. 24, as Hurricane Harvey approached the Texas coast, to $159.91 at the close of trading Tuesday, after Hurricane Irma also made landfall in the U.S.
Lowe’s Companies stock rose during that same period, but less enthusiastically. Lowe’s was up 72 cents to $78.44 a share, a gain of 0.9 percent.
Yet, when the winds die down and the water recedes, all the added storm-related sales do not necessarily translate directly to huge profits.
There’s the cost of managing the crisis.
So while outsiders see the added revenue, they don’t see what’s behind the scenes, said company spokesman Stephen Holmes. “Everybody gets excited but at the same time, it all comes as a great expense.”
As big storms approach, the company sets up a “command center” in its Atlanta headquarters to oversee preparations and responses.
Materials are directed or re-directed. Stores are monitored to make sure they close before employees are in danger. Teams are readied and sent in after the storms pass to assess damage.
Profit-wise, like most companies, Home Depot is sensitive to issues of gouging during a crisis. So once a state of emergency is declared in a state, prices are frozen for all storm-related goods.
For the home improvement giant, which has 154 stores in Florida and 90 in Georgia, the mix of challenge and opportunity is not crisp. The company may have materials and equipment to sell, but there are also thousands of employees, along with millions of dollars’ worth of real estate and inventory, to fret about.
The command center operations involve about 100 people.
On Tuesday, Home Depot and trucking company Werner Enterprises of Omaha coordinated a convoy of 41 Werner trucks – along with a police escort – that carried storm-related goods south to Home Depot stores in Florida.
By Wednesday, all but three stores of the hundreds affected by the storms were open: Only the stores in Key West, Marathon and St. Thomas remained closed, Holmes said.
Meanwhile, there’s a month and a half left in this hurricane season. What investors do remains to be seen. They could ride the ebb and flows of the weather, buying as hurricanes approach, selling while the price is high.
Holmes thinks the company’s best opportunities could be further into the future, as homeowners clean up and rebuild. “But no one knows what the long-term will be.”
Home Depot, stock price
Aug. 24, Harvey approaches Texas — $148.25
Sept. 8, Irma closes on Florida — $159.66
Sept. 12, Irma dissipates — $159.75
Home Depot, stock change
Past five days: up 3.3 percent
Past month: up 3.9 percent
Past year: up 24.6 percent
