Home Depot Beats Expectations, Boosts Revenue Outlook
Despite ongoing challenges in the housing market, Home Depot reported a strong fiscal third quarter, surpassing Wall Street’s expectations and raising its full-year revenue forecast.
Revenue Growth and Store Performance
The Atlanta-based retailer saw revenue climb 6.6% to $40.22 billion, exceeding analysts’ predictions of $39.31 billion. While sales at stores open at least a year slipped 1.3%, this represents a significant improvement from the previous quarter’s 3.3% decline. In the U.S., sales at stores open at least a year fell 1.2%, a marked improvement from the prior quarter’s 3.6% drop.
Positive Signals Amidst Sales Slump
Neil Saunders, managing director of GlobalData, noted that Home Depot’s U.S. business experienced a modest revenue decline of 1.2%, the shallowest rate of decrease in two years. This suggests that the retailer may be nearing the end of its sales slump and poised for growth.
Customer Transactions and Average Ticket
Third-quarter customer transactions were nearly flat compared to the prior-year period, while the average ticket size declined slightly to $88.65 from $89.36 a year earlier.
Housing Market Challenges
Home improvement retailers like Home Depot continue to face challenges as homeowners delay larger projects due to higher interest rates and lingering inflation concerns. The U.S. housing market has been in a sales slump since 2022, with existing home sales falling 1% in September to a seasonally adjusted annual rate of 3.84 million.
Earnings and Guidance
Home Depot earned $3.65 billion, or $3.67 per share, for the period ending October 27. Excluding certain items, earnings were $3.78 per share, exceeding Wall Street’s expectations of $3.65 per share. The company now anticipates full-year revenue to rise about 4%, with sales at stores open at least a year expected to decline about 2.5%. Earnings per share are forecast to fall about 2%, with adjusted earnings per share declining approximately 1%.
CEO Commentary and Share Price
“We’re pleased with our third-quarter performance, which exceeded our expectations,” said Ted Decker, chair, president, and CEO. “As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects, as well as incremental sales related to hurricane demand.” In premarket trading, Home Depot shares rose 2.5%.
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