Home Depot relies on small project demand to beat estimates – National

Home Depot beat quarterly profit estimates and posted a smaller-than-expected decline in comparable sales on Tuesday, as the top U.S. home improvement retailer benefited from its customers’ shift toward small-scale projects and construction projects. essential repairs.

U.S. consumers have put major renovations and discretionary home improvement projects on the back burner as they struggle with continued high food prices, continued caution about the economy and rising interest rates. ‘interest.

“Similar to the second quarter, we saw continued customer engagement with smaller projects and experienced pressure in some high-cost discretionary categories,” CEO Ted Decker said in a statement.

Customer transactions fell 2.4 percent in the third quarter, down for the 10th consecutive quarter, while average spending in stores also fell slightly.

Meanwhile, comparable sales fell 3.1 percent for the three months ended Oct. 29, while a**lysts on average expected a 3.31 percent decline. Earnings of $3.81 per share beat estimates of $3.76 (all in U.S. dollars).

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The company’s shares, down 8.8 percent this year through Monday’s close, were up about 1 percent before the market opened.

“With continued pressure on some expensive discretionary categories and a trend toward smaller projects, HD has taken a conservative approach – which we agree with,” said Evercore a**lyst Greg Melich.

Some investors, however, may be disappointed by the downward revision of forecasts for the full year, despite slightly better results, he added.

Home Depot tightened its annual sales forecast range to a decline of between 3 and 4 percent, compared to its previous forecast of a 2 to 5 percent decline.

The group now expects annual earnings per share to fall by 9 to 11 percent, compared to a previously estimated fall of 7 to 13 percent.

“I don’t really think these are the type of results that would change any investment perspective…for home improvement retailers,” said John Tomlinson, an a**lyst at M Science.

“Unless real estate revenue improves, our expectations are muted heading into 2024. I don’t know if you’re going to see the same level of decline that we’ve seen this year… but consumption in general and sales will remain weak and under pressure,” he added.

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