Home Depot Warns of Weaker Sales Ahead

Home Depot announced on Tuesday that it exceeded quarterly expectations, yet warned of weaker sales in 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 projected 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 sales, the revised forecast indicates a revenue reduction. The company’s Chief Financial Officer, Ted McPhail, noted that professionals in the industry are observing a shift in consumer behavior, with customers not only deferring purchases due to higher financing costs but also due to increased economic uncertainty. This week, additional consumer insights are expected as Walmart prepares to report earnings and the government releases retail sales figures. In the fiscal second quarter, Home Depot's net income fell to $4.56 billion, or $4.60 per share, down from $4.66 billion, or $4.65 per share, in the same period last year. Comparable sales dropped 3.3% overall and 3.6% in the U.S., surpassing analysts' expectations of a 2.1% decline. This marks the seventh consecutive quarter of negative comparable sales, with fewer customers visiting stores and spending less during their visits. As of Monday’s market close, Home Depot's shares have decreased by less than 1% this year, underperforming the S&P 500, which has seen a 12% increase.