(Reuters) – Home Depot Inc 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.
(Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli and Saumyadeb Chakrabarty)