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Home Depot sales fall short amid delayed spring, 'softness' in large projects

Home Depot exterior
The Home Depot ended the quarter with a total of 2,337 stores.

The Home Depot reported mixed results for its first quarter with earnings that beat estimates, but sales that fell short as spring stalled and consumers put off large discretionary projects such as bathroom remodels. 

The home improvement giant was also challenged by a tough housing market and higher interest rates. 

Home Depot reported that its net income decreased to $3.6 billion, or $3.63 per share, for its first quarter, down from $3.87 billion, or $3.82 per share, in the year-ago period. Analysts had expected earnings per share of $3.60.

Net sales decreased 2.3% to $36.4 billion, missing analysts estimates of $36.6 billion. The average ticket fell 1.3% to $90.68. Comparable sales fell 2.8%, and were down 3.2% in the U.S.  

In a statement, president and CEO Ted Decker said that the company continued to grow market share in the quarter. 

“And while the quarter was impacted by a delayed start to spring and continued softness in certain larger discretionary projects, we feel great about our store readiness, our product assortment in stores and online, and our associate engagement,” he continued. “Our associates are energized and ready to serve our customers as spring breaks across the country.”

In an interview with CNBC, Home Depot CFO Richard McPhail attributed the company’s softer sales in large part to consumers’ “deferral mindset” and a housing market that has slowed dramatically.

“The home improvement customer is extremely healthy from a financial perspective,” he said. “And so it’s not the case of not having the ability to spend. What they tell us is they’re just simply deferring these projects as given higher rates, it just doesn’t seem the right moment to execute.”

Home Depot backed its full-year fiscal 2024 guidance, which has 53 weeks of operating results. It expects total sales growth of about 1%, with the 53rd week expected to add about $2.3 billion to the total, and earnings-per-share-percent growth of approximately 1.0%Same-store sales are expected to fall about 1% for the 52-week period. The company will open about 12 new stores during the year. 

During the quarter, the Home Depot has entered into an agreement to acquire SRS Distribution Inc., a building products supply company serving the professional roofer, landscaper and pool contractor sectors, in a deal valued at $18.25 billion. The deal, which has not year closed, is not included its fiscal 2024 guidance.

At the end of the first quarter, the Home Depot operated a total of 2,337 retail stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. The company employs approximately 465,000 associates.

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