Home Depot misses estimates as home improvement demand softens

Home Depot (HD) reported its fiscal first quarter 2023 earnings results on Tuesday, falling short of estimates as consumer spending on home improvement slowed compared to the pandemic-induced surge.

While Home Depot beat earnings expectations, its revenue for the first quarter declined by 4.2% compared to the same period last year. Same-store sales growth also disappointed, with a 4.5% decrease, significantly lower than the estimated 1.42% decline.

The company’s shares dropped over 4% in pre-market trading following the announcement.

CEO Ted Decker acknowledged the moderation in the home improvement market.

“After a three-year period of unprecedented growth for our sector, during which we grew sales by over $47 billion, we expected that fiscal 2023 would be a year of moderation for the home improvement market,” Decker said in a statement.

Factors such as lumber deflation and adverse weather conditions, particularly in the Western division due to extreme weather in California, contributed to lower sales, according to the CEO.

For the three-month period ended April 30, 2023, Home Depot reported revenue of $37.3 billion versus an expected $38.34 billion, adjusted earnings per share of $3.82 compared to an expected $3.80, and a 4.5% decline in same-store sales versus an estimated 1.42% decrease.

For fiscal year 2023, the company now anticipates a 2% to 5% decline in sales and comparable sales compared to fiscal 2022. The operating margin rate is expected to be slightly lower than initially projected, ranging between 14.3% and 14.0%. Home Depot also expects diluted earnings per share to drop between 7% and 13% compared to fiscal 2022, reflecting uncertainties and softer demand.

Contact Angela at [email protected]

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