Home improvement giant Home Depot (HD) has its share of problems with organized theft rings, as well as your run of the mill shoplifter. But it turns out that some of the hardest hits are insider jobs. A new job recently emerged in that vein, as manager Mauricio Jimenez was alleged to have conducted a “…deliberate and systematic fraud scheme…” within Home Depot. Home Depot shares slipped modestly in Friday’s trading.
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Home Depot first caught on to the scheme when the Home Depot Assurance & Advisory Management Program hit Jimenez’s previous store in Hialeah Gardens, Florida. There, they discovered what was called a “…high quality, high value, high markdown order.” That caught the program’s attention, and closer inspection found “multiple transactions” in a similar vein.
An arrest affidavit noted, “It was initially observed that he had several highly excessive markdowns conducted to repeated customers.” Store leaders also noted that Jimenez was connected to “…irregularities in high-volume bulk transactions” in his store. This led to the “…deliberate, systematic, and ongoing scheme to defraud Home Depot…” that ultimately hit the business for “…a negative sales margin of around $4.3 million to these accounts.”
Defoliating the Phone Tree
Meanwhile, Home Depot may have traded one bad idea for another, as it is getting rid of its phone menus and replacing them with artificial intelligence (AI) tools. Reports indicate that the switch will get people connected to where they need to be as much as four times faster.
Home Depot noted, “…nobody likes being trapped in a phone menu when they have a project or job to finish.” And this is true, but the idea that handing it off to an artificial intelligence will solve the problem may not be the way to go. If it does achieve the four times faster figure, then this may be a moot point for many customers. But there are those who will refuse to deal with it simply because it is AI, and that may hurt Home Depot almost as much as it helps.
Is Home Depot a Good Long-Term Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on HD stock based on 17 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 4.87% loss in its share price over the past year, the average HD price target of $425.06 per share implies 25.35% upside potential.
