Home Depot reported a 3% decline in quarterly sales compared to the previous year, surpassing Wall Street estimates as customers focus on smaller home improvement projects. The retailer, however, expressed caution for the upcoming months, narrowing its full-year outlook with anticipated sales falling 3% to 4%. The dip in earnings per share is expected to be between 9% and 11%, reflecting a moderation in home improvement projects.
In Q3, Home Depot's earnings per share stood at $3.81, outpacing the expected $3.76, and revenue reached $37.71 billion, slightly exceeding the anticipated $37.6 billion. Despite a net income decline to $3.81 billion, comparable sales only dropped 3.1%, less than the projected 3.6%. This marks the fourth consecutive quarter of declining comparable sales, influenced by factors like rising mortgage rates and inflation.
Why it matters
Facing challenges from elevated mortgage rates and inflation, Home Depot observed a shift in customer behavior. There is a trend towards scaled-down projects, with customers opting for partial remodels instead of comprehensive home renovations. The company emphasized the financial health of its customer base, asserting that homeowners remain actively engaged in home improvement, supported by stable employment, income gains, and accumulated savings.