Home Depot facing 4% sales decline as consumers hold back
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The news: Home Depot lowered its 2024 sales outlook, predicting a 3% to 4% decline in comparable sales, worse than the previously expected 1% decline for the year.
The context: The warning comes amid weak discretionary spending with consumers reluctant to spend on major home projects amid high interest rates and inflation. The pullback is a reversal of pandemic sales, when many people chose to upgrade their homes.
Consumers are postponing major purchases amid high interest rates and inflation, impacting Home Depot's sales. This shift contrasts with the increased spending during the pandemic.
The numbers: Home Depot’s second quarter comparable sales were 3.3% lower, the seventh straight quarter of declines, and a worse than the 2.7% decline expected by Wall Street’s expectations. Adjusted earnings per share were better than expected at USD4.67. Shares dropped over 4% in premarket trading.
What they said: “It’s simply a story of a deferral mindset among our customers who have the means to spend” but are just waiting for interest rates to come down before they do, Chief Financial Officer Richard McPhail told Bloomberg in an interview.
The fundamentals of the business remain strong, McPhail said, and the company will continue to invest in its professional business, supply chain and digital capabilities.
The sources: Home Depot , Bloomberg
