Home Depot Lowers 2024 Outlook Due to Economic Concerns

Home Depot, the largest home improvement retailer in the U.S., reported a modest rise in second-quarter sales, largely attributed to its recent $18 billion acquisition of SRS Distribution. This acquisition, which added $1.3 billion to the company’s quarterly sales, allows Home Depot to supply materials to professionals in various sectors, including roofing and landscaping. Despite this boost, consumer spending remains cautious due to rising costs and high interest rates. In the first quarter, Home Depot experienced a 2.3% decline in sales, totaling $36.42 billion, as the company faced challenges from elevated mortgage rates and inflation, alongside a delayed spring season. Looking ahead, Home Depot has revised its sales outlook for 2024, now anticipating a decline of 3% to 4% for stores open at least a year, a shift from its previous estimate of a 1% decline. The company also expects a decrease in full-year earnings per share by 2% to 4%, contrasting with earlier projections of a 1% growth. The ongoing economic climate, characterized by high interest rates and uncertainty, has significantly impacted consumer demand for home improvement projects. Elevated mortgage rates have deterred potential homebuyers, prolonging a housing slump that has persisted for three years. In June, sales of previously occupied homes fell for the fourth consecutive month, highlighting the broader challenges facing the housing market. For the quarter ending July 28, Home Depot reported earnings of $4.56 billion, or $4.60 per share, slightly surpassing Wall Street expectations of $4.54 per share.