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Cost of spreading virus weighed on Home Depot in early 2020

May 19, 2020 GMT

A clerk assists customers at the garden center at a Home Depot store in Harrisburg, Pa., on Wednesday, May 6, 2020. As swaths of Pennsylvania prepare for a limited reopening Friday, some fed-up business owners are jumping the gun and have resumed serving customers in defiance of Gov. Tom Wolf’s shutdown order. Home Depot said Wednesday that "many essential items" are in the outside garden area of its stores, including building materials, retaining walls, and drainage and repair products. (AP Photo/Mark Scolforo)

ATLANTA (AP) — The cost of the spreading coronavirus pandemic dragged on profits early in the year at Home Depot.

The world’s biggest home improvement chain upped compensation for employees, extended dependent care benefits and waived related co-pays. That set Home Depot back by $850 million in pre-tax expenses, or about 60 cents per share.

The cost of sales rose 7.3% in the quarter, which surged 7.1% as homeowners rushed to pick up essential supplies.

But on Tuesday, Home Depot pulled its financial guidance for the year with so much still unknown about the spread and duration of the virus, or its impact on spending.

Shares dropped 2.6% before the opening bell.

For the three months ended May 3, Home Depot Inc. earned $2.25 billion, or $2.08 per share. Industry analysts had expected $2.26 per share., according to a survey by Zacks Investment Research.

Last year, the Atlanta company earned $2.51 billion, or $2.27.

Revenue increased to $28.26 billion, from $26.38 billion, beating Wall Street’s estimate of $27.61 billion.

Sales at stores open at least a year rose 6.4%. In the U.S., they climbed 7.5%.