The brand of U.S. home improvement chain Home Depot is seen in Mexico City, Mexico January 15, 2020.
Luis Cortes | Reuters
Home Depot on Tuesday said quarterly sales declined nearly 3% 12 months over 12 months, however it surpassed Wall Street’s earnings and revenue expectations despite the cooler demand.
The house improvement retailer said it expects total sales to grow about 1% in fiscal 12 months 2024, which incorporates a further week. That compares with a 1.6% increase expected by Wall Street, based on StreetAccount. Home Depot also anticipates it’ll open a few dozen latest stores through the 12 months.
On a call with CNBC, Chief Financial Officer Richard McPhail said demand for home improvement dipped all year long as consumers spent more of their dollars on experiences. He added that falling lumber prices and rising rates of interest hurt the business.
Home Depot now sees a probability to return to growth, McPhail said.
“Our market is on its way back to normal demand conditions,” he said. “We’re not quite there yet, however the pressures we saw in 2023 are receding.”
Here’s what the corporate reported for the three-month period ended Jan. 28 compared with what Wall Street expected, based on a survey of analysts by LSEG, formerly Refinitiv:
- Earnings per share: $2.82 vs. $2.77 expected
- Revenue: $34.79 billion vs. $34.64 billion expected
Home Depot shares fell nearly 2% in premarket trading.
Net income for the fiscal fourth quarter fell to $2.80 billion, or $2.82 per share, from $3.36 billion, or $3.30 per share, a 12 months earlier.
Net sales decreased from $35.83 billion within the year-ago period.
Home Depot has faced a tougher sales backdrop over the past 12 months. The house improvement retailer is following a greater than two-year period when Americans had more money and time to spend on painting and fixing up their homes through the pandemic.
The corporate has also felt a pullback in consumer spending, particularly on big-ticket items, as some families postpone discretionary purchases due to inflation, delay buying a latest home because of upper rates of interest or decide to spend on experiences slightly than goods.
Throughout the past 12 months, McPhail and CEO Ted Decker described 2023 as “a 12 months of moderation” after the outsized gains through the pandemic.
On Tuesday, McPhail said customers are still laying aside greater projects – especially the large-scale projects that will require a loan – because of upper borrowing costs.
Yet he said sales throughout the fourth quarter were pretty consistent, apart from a decline in January as a consequence of colder and wetter weather. He said that temporary drop didn’t factor into the corporate’s outlook for the 12 months ahead.
Average ticket and customer transactions each declined within the fourth quarter compared with the year-ago period. Average ticket dropped to $88.87 from $90.05 within the year-ago quarter, reflecting a more typical pricing environment, McPhail said.
As of Friday’s close, shares of Home Depot were up nearly 5% this 12 months. That roughly matches the gains of the S&P 500 through the same period. The corporate’s shares closed at $362.35 on Friday, bringing Home Depot’s market value to about $360 billion.
This story is developing. Please check back for updates.
