Home Depot Cuts Its Outlook for the Year

Sales edge up to $43.18B, beating Wall Street expectations, thanks to an acquisition
By Newser.AI Read our AI policy
Posted Aug 13, 2024 7:14 AM CDT
Home Depot Cuts Its Outlook for the Year
A view of the exterior of the Home Depot improvement store, in Niles, Ill., on Feb. 19, 2022. Home Depot reports earnings on Tuesday, Nov. 14, 2023. Home Depot's sales rose slightly in its fiscal second quarter as the country's biggest home improvement retailer saw gains from a recent acquisition, but...   (AP Photo/Nam Y. Huh, File)

Home Depot's second-quarter performance showed a slight sales increase, primarily aided by its recent $18 billion acquisition of contract supplier SRS Distribution. SRS added $1.3 billion in sales, pushing quarterly sales up to $43.18 billion; that surpassed Wall Street's expectation of $42.57 billion. According to GlobalData's Neil Saunders, the acquisition has bolstered Home Depot's specialist category offerings and will provide long-term sales and bottom-line advantages.

Despite the improvement, Home Depot continues to face challenges. Customer transactions fell by 1.8% in the quarter, with the average ticket dropping to $88.90 as compared to $90.07 last year. Sales at stores open for at least a year fell by 3.3% in the quarter. Home Depot has now revised its 2024 growth outlook and anticipates a sales decline of 3% to 4% at long-established stores, compared to an earlier forecast of about a 1% decline.

CEO Ted Decker highlighted the current economic pressures, attributing weaker home improvement spending to higher interest rates and macro-economic uncertainty. Elevated mortgage rates have significantly dampened homeowner enthusiasm, further dragging on the housing market. Home Depot's shares slipped 3% before the opening bell amid broader concerns about the home improvement sector's future. Despite this, Decker asserts that the long-term fundamentals supporting home improvement demand remain strong. (This story was generated by Newser's AI chatbot. Source: the AP)

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