home depotThe company said Tuesday its quarterly sales rose more than 6% annually as it combined a newly acquired business and as hurricane-related repairs and good weather in many parts of the country boosted demand for home improvements. Supplies needs.
The retailer also raised its full-year forecast to reflect its better-than-expected results. Currently, the company expects total sales to grow approximately 4%, including the impact of the acquisition of SRS Distribution. Total sales were previously expected to grow 2.5% to 3.5% this year. Both outlooks include growth in the 53rd week of the current fiscal year and a contribution of approximately $6.4 billion from SRS, which sells supplies to professionals in the roofing, landscaping and pool businesses.
The company expects comparable sales to decline approximately 2.5% over the 52-week period. Home Depot previously expected industry indicators, including the company’s website and stores open for more than a year, to decline 3% to 4% from the previous fiscal year.
Chief Financial Officer Richard McPhail told CNBC that the retailer’s forecast reflected last quarter’s strong performance. But he said consumers were still delaying purchases as they waited for mortgage rates and borrowing costs to drop and Express caution about the economy.
“There is pent-up demand for the project,” he said. “Our clients tell us their lives are changing. Their families are growing. They’re upsizing, they’re downsizing. They need to move for work. There’s a need for remodeling, but they’re putting it on hold until they look at A more favorable financing environment exists, the question is when it will be released.
Even though Home Depot customers are in good financial shape, they continue to delay projects, he said. About 90% of the company’s DIY customers own their homes.
The company’s report compared with Wall Street expectations for the three-month period ended Oct. 27, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: $3.67 per share, expected $3.64 per share
- income: US$40.22 billion, expected to be US$39.32 billion
Home Depot shares rose more than 1% in premarket trading.
Home Depot’s sales have been hit by economic factors, as rising interest rates have slowed home turnover and more than two years of high inflation have made homeowners less willing to buy discretionary and do-it-yourself projects. The company had Full-year comparable sales forecast lowered In August, citing consumer uncertainty.
McPhail said these dynamics have persisted in recent months.
Home Depot’s third-quarter net income fell from $3.81 billion, or $3.81 per share, to $3.65 billion, or $3.67 per share. same period last year. Revenue increased 6.6% from US$37.71 billion in the same period last year.
A shopping cart filled with merchandise at a Home Depot store in Miami, Florida on November 14, 2023.
Jon Cherry | Bloomberg | Getty Images
Comparable sales for the entire business fell 1.3% in the quarter. That was better than the 3.3% drop analysts expected, according to StreetAccount. The indicator fell by 1.2% in the United States
This marks Home Depot’s eighth consecutive quarter of negative comparable sales., Although it was the smallest decline since the series of declines began. This year’s results haven’t weighed on the stock.
Home Depot shares were up about 18% this year as of Monday’s close, lagging the S&P 500’s gain of about 26%.
The number of shoppers visiting Home Depot stores and shopping online was the same as last year. On average, customers spent $88.65 on these transactions, nearly the same as the average ticket price of $89.36 during the same period last year.
These figures exclude SRS acquisitions and new stores, which contributed to the company’s total sales earnings. Home Depot expects to open about 12 new stores this fiscal year, which ends in early February.
McPhail said the weather has provided short-term benefits to Home Depot this season. With the warmer and drier weather extending into the summer, customers purchased outdoor items like grills or purchased paint for a project, he said.
Sales related to Hurricanes Helen and Milton contributed about half a percentage point to the quarter’s sales growth. customer Purchase preparation items, such as generators, batteries, and plywood, and then purchase repair items, such as building materials.
Even though Home Depot posted modest growth, some investors are betting the company will see stronger sales in the near future. The Federal Reserve approved its Second rate cut in a row Last week, a move emerged to determine the fees banks charge on consumer debt — such as mortgage rates and loans homeowners might take out for remodeling projects. Home prices remain high and the aging of the U.S. housing stock continues to drive repair and maintenance projects.
Additionally, Home Depot is seeking greater business from home professionals such as contractors and roofers to drive sales. Earlier this year, Home Depot Acquisition of SRS Distributiona Texas-based company, completed the largest acquisition in the home improvement retailer’s history for $18.25 billion.
However, McPhail added that it’s difficult to predict when consumer mentality will change and trigger higher home closing volumes. He noted that mortgage rates have actually increased since the September meeting Where the Fed cut interest rates for the first time Since the early days of the Covid pandemic.
“The good news is that housing volume is probably not going to get worse,” he said. “The worst of the decline in home sales may be behind us. The question now is, ‘What can unfreeze it and when will that happen?'”
As inflation cools, it could also put price pressure on Home Depot in the coming year. among retailers May face higher costs if elected president Donald Trump Implement plans to impose tariffs on imported goods, especially those from China.
McPhail declined to say what percentage of Home Depot’s merchandise comes from China, but he said most of the supply comes from North America. He said Mexico “is an important source of goods for us.”
“We do source from several Asian countries, so we’re paying close attention,” he said. “We have focused on sourcing diversity for many years and we will continue to evaluate future sourcing decisions.”
Some retail leaders, including the CEO of Elf Beauty, say they may have to Increase prices due to tariffs. Footwear maker Steve Madden says it will import fewer goods from China up to 45% over the next year.
In addition to weather factors, the holiday season also boosted Home Depot’s sales. It sells a variety of decorations, including many different artificial Christmas trees.
Since the company’s 12-foot skeleton Skelly made a splash during Halloween, Home Depot has introduced other eye-catching and often oversized decorations, including an 8-foot-tall Santa Claus and large animated reindeer.
“I don’t think there are many communities in America that don’t have giant outdoor decorations like ours at Home Depot,” he said. “So we’re coming to your neighbor’s front yard, and you don’t want to get beat.”
