Home Depot surpasses sales, profit estimates with focus on smaller remodeling projects.
Home Depot Posts Better-Than-Expected Quarterly Results
By Deborah Mary Sophia
(Reuters) – Home Depot announced its quarterly results today, exceeding expectations. Despite a decrease in larger remodeling and renovation projects, Americans continue to spend on small-scale home improvement projects.
Shares of the company rose about 1% after the announcement. The second quarter saw a recapture of seasonal sales lost earlier this year due to a slow start to Spring.
Investors are now eagerly awaiting reports from Walmart and Target later this week, as they focus on discretionary spending trends amidst sticky inflation and higher borrowing costs.
Home Depot’s quarterly customer transactions drop of 1.8% improved from the prior quarter, driven by higher sales of plants, landscaping supplies, and steady demand from Pro-customers for products like fasteners and insulation.
The company has maintained its annual forecasts after cutting them in May.
CEO Ted Decker stated, “While there’s a lot of positives in the macro and with the consumer, we still see enough uncertainty, largely driven by consumer spending shifting from goods to services, to not revise our guidance.”
According to Refinitiv IBES data, quarterly comparable sales fell 2% in the second quarter, smaller than expectations for a 3.54% drop. The company’s per-share profit of $4.65 also topped estimates of $4.45.
Big-ticket transactions, or those over $1,000, remained under pressure, declining 5.5%. Demand for one-time purchases like patio furniture and large appliances was soft, said Billy Bastek, executive vice president of merchandising.
Despite these challenges, there are signs of improvement in the housing market. New home sales jumped 12.2% in May to the highest level in nearly 1-1/2 years, while new home construction surged by the most in over three decades.
Analyst Joe Feldman from Telsey Advisory Group expressed caution, stating, “Whether the bottoming in the housing market would translate to sales or not – that’s where there is caution from investors.”
Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila
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