Home Depot Reports Drop in Sales and Income, Lowers Expectations for the Year

Home Depot, the US home improvement retailer, has reported a 4.5% fall in sales at stores open for at least a year, as well as a 6.4% drop in income compared to the same period last year. Home Depot CEO Ted Decker said that the company had expected a year of moderation for the home improvement market in 2023, following three years of unprecedented growth during which it grew sales by over $47bn.[0] The company’s shares fell by as much as 4% in early trading, before recovering to a 1.4% drop by 1:15 p.m.[1] It is not clear what needs to be rewritten as “ET” is already a shortened form of “Eastern Time”. Please provide more context or information.[2] Home Depot has lowered its sales expectations for the year, now predicting a decline of between 2% and 5%, compared with its previous prediction of flat sales for the period. The company’s operating margin rate is also expected to be lower than initially forecast, at between 14% and 14.3% compared with the previously expected 14.5%, after a $1bn investment in employee wages.[3]

The fall in sales is believed to be due in part to lumber deflation and unfavourable weather, particularly in the Western division, which was disproportionately affected by extreme weather in California.[4] Home Depot CFO Richard McPhail said that while the “homeowner customer is extremely healthy… there is… a shift, even if it’s temporary, from larger projects into smaller ones”. Decker added that the size of projects was getting smaller, with projects being deferred or broken up into smaller chunks due to cautious consumers and the impact of inflation.

Home Depot’s results are seen as an indicator of sentiment among US consumers, with Target and Walmart also due to report earnings this week.

0. “Home Depot revises sales estimate for 2023, cites public’s post-COVID changes” UPI News, 16 May. 2023, https://www.upi.com/Top_News/US/2023/05/16/home-depot-revises-2023-forecast/3321684254947/

1. “Home Depot posts Q1 revenue miss, cuts forecasts as shoppers pull back spending” Yahoo Finance, 16 May. 2023, https://finance.yahoo.com/news/home-depots-q1-earnings-204758188.html

2. “Why Home Depot Stock Sank Today” The Motley Fool, 16 May. 2023, https://www.fool.com/investing/2023/05/16/why-home-depot-stock-sank-today/

3. “Home Depot posts worst revenue miss in about 20 years, lowers forecast as consumers delay big projects” CNBC, 16 May. 2023, https://www.cnbc.com/2023/05/16/home-depot-hd-earnings-q1-2023.html

4. “Home Depot’s Q1 Performance: Lumber Deflation, Inclement Weather Hits Revenue, Lowers FY23 Outlook – Home …” Benzinga, 16 May. 2023, https://www.benzinga.com/news/earnings/23/05/32416468/home-depots-q1-performance-lumber-deflation-inclement-weather-hits-revenue-lowers-fy23-outlook