Orchard Supply responds to big-box pressure

During San Jose, Calif.-based Orchard Supply Hardware’s first-quarter conference call, CEO Mark Baker was asked about challenges posed by Home Depot, which is Baker’s former employer. 

Specifically an analyst brought up Home Depot’s promotional pricing strategies and the implementation of service-boosting program’s at the world’s largest home improvement retailer. “What kind of impact has that had on your expectations of volume?” asked Nick Farwell of the Arbor Group.

Baker, a former chief merchant at Home Depot, credited Home Depot for “doing as well in this current market as we’ll ever expect them.” He added that Orchard is competitive on key items -- grills, for instance -- that have broad assortments.

Furthermore, surveys indicate the Orchard Supply gets credit from customers as having a higher service component than Home Depot.

However, the comp-store story for the first quarter tilts in favor of Home Depot, which posted positive 5.8% comp-store sales for the first quarter, compared with negative 3.1% for Orchard Supply. 

Despite negative comps in the first quarter, Orchard Supply said May has been “solid,” and the company anticipates positive comp-store sales for the full year. 

Orchard Supply, currently an all-California retailer, plans to expand to the Pacific Northwest in fiscal 2013, Baker said. “The Pacific Northwest is a large and growing garden market. We view this region as a national extension of Orchard's strong presence and 80-year history in California,” Baker said.