Home Depot posted its biggest sales gain since 2022 on Tuesday. The company’s chief executive, however, was not there to boast about it.
Last week, Home Depot said that its chief executive, Ted Decker, would step away temporarily for medical reasons and that two trusted lieutenants would fill in.
On Tuesday, the company said that it expected Mr. Decker to return in a few months and that it would “share any material developments as appropriate.”
Despite an uncertain economic climate, Home Depot posted comparable sales that were up 1.7 percent for the most recent quarter. The results signal that U.S. households are spending on smaller home improvement projects, even with elevated housing costs.
“While consumer uncertainty and housing affordability continue to pressure demand for larger home improvement projects, we remain focused on what we can control,” said Richard McPhail, the chief financial officer of Home Depot, who is helping to manage the business during Mr. Decker’s leave.
The company has been undergoing a number of big changes. It has been acquiring specialty trade companies to help build its professional contractor business. Like all other major companies, it is also investing in and figuring out the best way to deploy artificial intelligence in its stores and back-end operations.
Under Mr. Decker, Home Depot has worked to cope with economic pressures that his temporary replacements must now manage. Inflation, higher financing costs and a precarious job market have prompted homeowners to put remodeling projects on hold. Low housing turnover has also taken a toll on its business.
“We’ve seen housing turnover at these low levels for four years now,” Mr. McPhail said. “There’s just no sign of an inflection point at this moment.”
The sudden absence of the chief executive at a company with a widely owned stock and a $337 billion market value caught people’s attention. Home Depot, which reaped $165 billion in sales last year, is one of the country’s largest retailers, with 470,000 workers and more than 2,300 stores including locations in every state.
Handling a chief executive’s sudden absence is a complicated push and pull between the executive’s privacy and the responsibility to keep investors informed of issues that affect the company. The company declined to provide further details beyond saying the company had “made the decision to protect his medical privacy.”
Stephan Meier, a professor of business and organizational behavior at Columbia Business School, said there was “definitely this trade-off between protecting his privacy and on the other hand being transparent.”
Home Depot announced that Ann-Marie Campbell, senior executive vice president of U.S. operations, and Mr. McPhail, the finance chief, would split Mr. Decker’s responsibilities during his absence.
“They have multiple stakeholders to manage: customers, Wall Street and employees because you have to project that confidence that, yes, the C.E.O. is gone, but, look, there are other people who understand the internal workings of the business as well,” said Neil Saunders, managing director at the retail consultancy GlobalData.
Management experts say communication in these situations is paramount. Not providing enough information can lead to more questions and scrutiny.
Failing to be transparent can lead investors to question a company’s governance protocols. In September 2019, Oracle announced that its co-chief executive Mark Hurd would step away from the company. He died a month later. The software firm had known that Mr. Hurd was sick for months, and management experts argued at the time that the company should have disclosed his illness sooner.
“The possibility that a C.E.O. could get sick is a risk that afflicts every company,” said Brett Bruen, president of the Global Situation Room, a consulting firm based in Washington. “You shouldn’t be coming up with your game plan only when they divulge that.”
After Jamie Dimon, the chief executive of JPMorgan Chase, the largest bank in the United States, was diagnosed with throat cancer in 2014, the firm released a note signed by Mr. Dimon sharing the news. It included details of his prognosis and treatment plan and the fact that he would still be actively involved in the business. He also reassured employees and investors that the bank had other strong leaders.
In moments like these, Mr. Bruen said, it is important to highlight the company’s deep bench of talent. In selecting two executives to lead during Mr. Decker’s leave, Home Depot seems to be addressing important constituents. Ms. Campbell, who oversees U.S. stores and operations, will focus on day-to-day operations. Mr. McPhail will focus on the company’s financials and building its business for professional contractors, a greater focus for the retailer during Mr. Decker’s tenure.
Ms. Campbell, who started at Home Depot as a cashier in 1985, is well known among store workers. Mr. McPhail has been with the company for more than 20 years. Alongside Mr. Decker, he is the face of the company to Wall Street. Mr. McPhail speaks on every earnings call and meets with investors to update them on the company’s strategy.
“Ann-Marie and Richard are experienced, long-serving executives who know the company, its operations and its strategy well,” a spokeswoman for Home Depot said. “Their respective responsibilities also align closely with their existing areas of expertise.”
The two are a “trusted pair of hands,” Mr. Saunders of GlobalData said. Many analysts see the company’s decision as making sure that Ms. Campbell and Mr. McPhail are playing to their strengths.
Still, Wall Street can sometimes have misgivings about a setup like this.
“I think the problem becomes that you don’t have that strong single voice,” Mr. Bruen said. “There are other sensitivities that emerge when two executives are asked to step in for a C.E.O.”
“You kind of pick winners,” Mr. Meier, the Columbia professor, said. “Is that then a signal that he or she will be the next C.E.O.?”
