A sign is seen posted on the exterior of a Home Depot store on February 21, 2023 in El Cerrito, California.
Justin Sullivan | Getty Images
Home Depot topped earnings expectations on Tuesday, but posted a 2% year over year sales decline as customers remained wary of big purchases and major projects.
It marked the first time in three quarters that the company beat Wall Street’s revenue expectations.
Yet the Atlanta-based home improvement retailer reiterated its forecast for the fiscal year despite the beat, saying it still expects sales and comparable sales to decline between 2% and 5% compared with the year-ago period. It had lowered the forecast last quarter.
In an interview on Tuesday, Chief Financial Officer Richard McPhail said the company has seen “continued caution on the part of consumers when it comes to larger ticket, more discretionary spending.”
He said Home Depot key pandemic dynamics are reversing, too. Company leaders “don’t expect to see meaningful inflation in the second half of the year.” He added that supply-chain disruption is “largely behind us.”
Here’s what the retailer reported for the three-month period that ended July 30 compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:
- Earnings per share: $4.65 vs. $4.45 expected
- Revenue: $42.92 billion vs. $42.23 billion expected
The company reported fiscal second-quarter net income of $4.66 billion, or $4.65 per share, down from $5.17 billion, or $5.05 per share, a year earlier. Revenue fell year-over-year from $43.79 billion.
The company’s shares slid less than 1% in premarket trading.
Home Depot faces a more challenging sales backdrop, as demand for do-it-yourself projects and contractors normalizes after nearly three years of unusually high demand. The company’s CFO Richard McPhail told investors earlier this year that 2023 would mark a year of moderation, as customers returned to more typical pre-pandemic patterns.
On top of that, the retailer faces a weakening housing market, inflation and consumers’ shift to spending more on services instead of goods.
As of Monday’s close, Home Depot’s shares are up 4% so far this year. That’s trailed behind the nearly 17% gain of the S&P 500. Shares closed at $329.95 on Monday, down less than 1%.
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