On Tuesday, Home Depot released its robust second-quarter financial data but warned of a lower annual sales profit amid a weaker consumer spending outlook.
Its stock price increased by 1.23% to $350.07 apiece on August 13. However, it is expected to drop by -0.15% to $349.55 per share in its after-hours session.
The company’s earnings per share jumped to $4.67, beating the analysts’ $4.54 estimates and the previous $3.63 figures.
Moreover, Home Depot’s revenue hit $43.18 billion, surpassing the $42.60 billion forecast and the $36.42 billion from the last quarter.
In the US, its comparable sales decreased 3.60% year-on-year, lower than its 2.40% decline consensus. Its customer transactions inched down by 1.80%, and its average customer receipts also slid by 1.30% to $88.90.
Meanwhile, the multinational retail corporation warned of a weaker annual profit and a further drop in comparable sales. This came amid dampened outlooks for consumer sentiment recovery this year, which was brought about by easing discretionary consumer spending.
Home Depot anticipates sales to fall between 3.00% and 4.00%, compared to its previous forecast of a 1.00% decline. Additionally, its diluted profit per share is expected to drop by 2.00% to 4.00%.
On the other hand, the home improvement company’s deal for materials supplier SRS Distribution could add around $6.40 billion to its sales during this period.
US Customers Delay Projects, Home Depot Cautions
Home Depot and other major corporations warned about a pullback in consumer spending. As a result, its US customers are postponing home upgrades, awaiting lower interest rates due to economic uncertainty, which has taken a toll on its sales.
McDonald’s and Starbucks also reported Americans worried about inflation are becoming pickier about where they spend their cash.
According to experts, interest rate decisions have a more significant impact on Home Depot than on average retailers. This is because a substantial portion of the home improvement domain is associated with the housing market.
