Resilient Demand Boosts Home Depot’s Outlook
Despite a challenging economic landscape, Home Depot is betting on steady demand from professional contractors to drive sales growth. The company has raised its annual same-store sales forecast, citing robust engagement in seasonal goods and outdoor projects, as well as incremental sales linked to hurricane-related demand.
Weather Normalization Spurs Sales
According to CEO Ted Decker, the normalization of weather patterns has contributed to increased sales in certain categories. “We’re seeing better engagement across seasonal goods and outdoor projects, which has helped to offset weakness in larger projects like kitchen renovations,” Decker stated.
Homeowners Focus on Maintenance Over Upgrades
In recent years, Home Depot has faced choppy demand as customers have grappled with rising inflation and higher mortgage rates. As a result, homeowners have shifted their focus towards repair and maintenance activities around their existing properties, rather than investing in bigger projects.
Q3 Results Beat Expectations
The company reported a 1.3% decline in comparable sales for the third quarter, marking its eighth consecutive quarter of declines. However, this figure was better than analysts’ average estimate of a 3.25% drop, according to data compiled by LSEG.
Updated Forecast Reflects Growing Confidence
Based on its Q3 performance, Home Depot has revised its fiscal year 2024 forecast, expecting a 2.5% decline in comparable sales. This updated outlook represents a more optimistic view than the company’s previous range of a 3% to 4% drop.
Shares Rise on Stronger-Than-Expected Results
Home Depot’s shares, already up 18% this year, rose 2% in premarket trading following the release of its Q3 results. The company’s resilient performance has instilled confidence in investors, who are betting on its ability to navigate ongoing economic uncertainty.
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