A Home Depot store in Livermore, California, US, on Thursday, May 12, 2022. Home Depot Inc. is scheduled to release earnings figures on May 17. Photographer:
David Paul Morris | Bloomberg | Getty Images
Home Depot’s quarterly sales have dropped by 3% compared to the previous year, however, they exceeded Wall Street’s expectations due to customers engaging in smaller DIY projects and home repairs.
While the retailer positively outperformed, it adopted a cautious approach for the upcoming months, narrowing its full-year outlook. The company is now anticipating a sales decline of 3% to 4% from the prior year and a decrease in earnings per share of 9% to 11%.
In an interview with CNBC, Chief Financial Officer Richard McPhail stated that the company’s results and forecast indicate a moderation in the home improvement sector.
According to McPhail, it is evidence that homeowners are opting for partial renovations of their property, downsizing the scale of projects compared to prior years.
Here’s what the retailer reported for the fiscal third quarter ended Oct. 29:
- Earnings per share: $3.81 vs. $3.76 expected
- Revenue: $37.71 billion vs. $37.6 billion expected
Home Depot reported net income of $3.81 billion, or $3.81 per share, down from $4.34 billion in the year-ago period. Revenue fell from $38.87 billion in the year-ago period.
Comparable sales fell 3.1% year over year, slightly better than the 3.6% anticipated by analysts. However, it marked the fourth straight quarter of declining comparable sales.
Home Depot has been dealing with challenges presented by higher mortgage rates and inflation, leading to decreased sales as customers pull back on pricier projects and big-ticket items.
Customer transactions decreased to 399.8 million from 409.8 million, with the average ticket remaining relatively stable at $89.36.
Despite these changes, Home Depot assures that its customers are in a healthy financial state and still remain active in home improvement.
Share prices of Home Depot have also declined, reflecting missed sales expectations twice over the past year and subdued performance in the stock market.
Shares of Home Depot have fallen nearly 9% so far this year, trailing behind the nearly 15% gains of the S&P 500 during the same period. The company’s stock closed Monday at $288.07, bringing Home Depot’s market value to about $288 billion.
— CNBC’s Robert Hum contributed to this report.
