When Home Depot reported its first-quarter earnings one topic dominated the conversation more than any other: inflation. Of course, other macro concerns came up, including house prices, interest rates, and recession worries. But inflation came up 32 times in the company’s conference call, stealing the show.

This is perhaps because inflation had a direct impact on the company’s results. In Q1, the home improvement retail giant’s sales rose to $38.9 billion, a 3.8% increase year over year, and earnings per share grew to $4.09, a 6% increase over 2021’s first quarter. While the growth was tepid, it came on top of a monster 2021 first quarter when Home Depot benefited from government stimulus checks and huge demand for home improvement goods.

Inflation Rears Its Ugly Head

The breakdown in Home Depot’s revenue growth is where inflation reared its ugly head. The number of comparable transactions decreased 8.4% year over year, but the average ticket size grew 11.2%. The outsized ticket growth “was driven primarily by inflation across several product categories as well as demand for new and innovative products.”

While the rate of inflation is higher than what management used for its projections last year, the good news is that thus far the consumer has been resilient in the face of it. CEO Edward Decker stated:

[I]nflation is definitely higher than we thought. If you recall, last year, we thought we’d have about 5% growth in ticket. We’re seeing obviously much higher than that with 11% in ticket. A lot of that is inflation-driven. But our customers are resilient. We are not seeing the sensitivity to that level of inflation that we would have initially expected.

The Executive VP of Merchandising, Jeffrey Kinnaird, noted that it wasn’t just inflation that drove the average customer receipts higher, but “demand for new and innovative products.” Decker noted that at its Store Manager Meeting nearly 90% of the products being displayed by vendors were entirely new products to the Home Depot universe.

Decker later added, “The consumer is hanging in there.” Kinnaird added that Home Depot was working closely with its suppliers to manage the inflationary environment. He stated:

We’ve had long-standing relationships with many of our suppliers, and it’s a partnership to understand the ongoing complexities of the inflation we’re seeing. What we are doing is we are still the customers’ advocate for value in our business. And if you look at the value that we’re offering across the spring categories, across the entire business, it is exceptional.

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