Home Depot Sees Sales Drop as Customers Delay Projects

Home Depot announced on Tuesday that it exceeded quarterly expectations, yet warned of weaker sales projections for the latter half of the year due to high interest rates and consumer uncertainty. The home improvement giant now anticipates a decline in full-year comparable sales by 3% to 4% compared to the previous fiscal year. While total sales are expected to rise between 2.5% and 3.5%, this includes a 53rd week in the fiscal year and approximately $6.4 billion from its sales reporting system (SRS). Excluding SRS, the revised forecast indicates a potential revenue cut. The company’s Chief Financial Officer, Ted McPhail, noted that for the first time, customers are not only deferring purchases due to higher financing costs but are also expressing concerns about the economic climate. This sentiment is echoed in the broader retail landscape, with upcoming earnings reports from Walmart and government retail sales data expected to provide further insights into consumer behavior. Despite its relatively stable customer base—split evenly between home professionals and DIY customers—Home Depot has still felt the effects of consumer hesitation. The retailer reported a net income of $4.56 billion for the fiscal second quarter, a slight decrease from $4.66 billion in the same period last year. Comparable sales fell by 3.3% overall and 3.6% in the U.S., surpassing analysts' expectations of a 2.1% decline. Looking ahead, Home Depot remains optimistic about the long-term prospects for home improvement, citing factors such as aging homes, a housing shortage, and significant property value increases during the pandemic.