Home Depot cuts outlook after missing expectations amid consumer caution
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The news: Home Depot lowered its full-year outlook after adjusted 3Q earnings and comparable sales fell short of analyst expectations, as US consumer caution, a weak housing market and reduced storm activity weighed on demand.
The world’s largest home-improvement retailer now expects adjusted earnings per share to decline 5% year-on-year, compared with its earlier forecast of a 2% drop. It also trimmed its comparable sales growth forecast to “slightly positive”, compared to its previous forecast of 1% growth.
The context: Home Depot’s results come amid broader economic pressures including high mortgage rates, consumer uncertainty and tariffs on imported goods, which the company said contributed to rising costs and softened demand for big-ticket home renovations.
The numbers: Adjusted earnings came in at USD3.74 per share, below FactSet’s analyst consensus number of USD3.84, and comparable sales rose 0.2%, missing the expected 1.3%. Net income declined slightly to USD3.6 billion from USD3.65 billion a year earlier.
Comparable customer transactions declined 1.6%, though sales of seasonal goods and big-ticket purchases over USD1,000 increased.
Shares fell as much as 5% after the result.
What they said: CEO Ted Decker said housing market pressure and consumer uncertainty in the US were having an outsized impact on home-improvement demand, while pointing to a lack of forced repairs from weather events as the primary reason for the result miss.
"Our results missed our expectations primarily due to the lack of storms in the third quarter, which resulted in greater than expected pressure in certain categories,” Decker said in a statement.
“Additionally, while underlying demand in the business remained relatively stable sequentially, an expected increase in demand in the third quarter did not materialize. “
The sources: The Home Depot, Wall Street Journal
