Home Depot has successfully emerged from a two-year slump in comparable store sales during the fourth quarter, as consumer interest surged in a housing market rocked by high mortgage rates and a limited supply of homes available for purchase.
Revenue for the Atlanta-based company increased to $39.7 billion from $34.79 billion in the previous year. Analysts surveyed by FactSet had predicted revenue of $39.15 billion.
An additional week in the quarter contributed approximately $2.5 billion to the reported sales figures, according to Home Depot on Tuesday.
Sales in stores open for at least a year, a crucial measure of a retailer’s performance, went up by 0.8%. In the U.S., comparable store sales were up by 1.3%. This marks the first quarterly rise since January 2023, exceeding the 1.5% decline anticipated by Wall Street.
The extra week was not factored into the results for same-store sales.
Neil Saunders, managing director of GlobalData, commented that the positive turnaround in U.S. comparable sales after eight quarters of declines is an encouraging sign for Home Depot, suggesting that the entire home improvement market may be nearing the lowest point of its current sluggish phase.
However, Home Depot projected a decline in per-share earnings of about 2% for this year, despite expecting sales growth of around 2.8%.
Shares saw a slight fall of approximately 2% before the markets opened.
The company noted an increase in customer transactions by 7.6% over the quarter, with spending per customer rising slightly to $89.11 from $88.87 year-on-year.
“Our fourth quarter results surpassed our expectations, demonstrating stronger engagement in home improvement spending despite continued pressures on large remodeling projects,” Home Depot’s Chair and CEO Ted Decker said in a statement. “Throughout the year, we remained committed to our strategic investments to prepare for ongoing success, despite uncertain macroeconomic conditions and a higher interest rate environment impacting home improvement demand.”
Home improvement retailers, including Home Depot, have faced challenges as homeowners delay bigger projects due to increased borrowing costs and ongoing inflation worries.
The U.S. housing market has seen a sales downturn starting in 2022, with mortgage rates rising from pandemic lows. Sales of previously owned homes in the U.S. fell last month, as elevated mortgage rates and prices deterred potential homebuyers, even with more properties on the market.
According to the National Association of Realtors, sales dropped 4.9% in January from December to an annual rate of 4.08 million units, adjusted for seasonal fluctuations. Home prices have risen year-on-year for the 19th consecutive month, with the national median sales price climbing 4.8% in January from last year to $396,900.
Sales of previously owned homes in the U.S. hit their lowest point in nearly 30 years last year.
Home Depot reported earnings of $3 billion, or $3.02 per share, for the three months ending February 2. This is an increase from the previous year’s $2.8 billion, or $2.82 per share.
When excluding certain items, the earnings were $3.13 per share, which surpassed Wall Street’s forecast of $3.04 per share.
