Home Depot experienced a robust increase in sales during the fourth quarter, surpassing Wall Street’s expectations, driven by better customer demand and an additional week within the period. The Atlanta-based company reported a revenue hike to $39.7 billion, a notable jump from $34.79 billion, outpacing analysts’ projections of $39.15 billion.
The company attributed approximately $2.5 billion in sales to the extra week within the quarter. Sales in stores open for at least a year—a key marker of a retailer’s health—grew by 0.8%, with U.S. stores seeing a 1.3% increment. Importantly, the extra week of sales was not factored into these same-store sales metrics.
The number of customer transactions increased by 7.6%, and the average amount spent per transaction edged up slightly to $89.11 from $88.87 compared to the prior-year quarter. Ted Decker, Chair and CEO, remarked that the fourth-quarter results exceeded expectations, citing increased engagement in home improvement spending despite ongoing pressures on major remodeling projects. He emphasized that Home Depot maintained investments in strategic initiatives to ensure future success amid uncertain economic conditions and a higher interest rate environment affecting home improvement demand.
Home improvement retailers like Home Depot are grappling with setbacks as homeowners defer larger projects due to increased borrowing costs and ongoing inflation concerns.
The U.S. housing market has been sluggish since 2022, when mortgage rates started climbing from pandemic-era lows. Last month, sales of existing homes in the U.S. decreased as rising mortgage rates and prices discouraged potential buyers, even with a larger selection of available properties. January’s sales dropped 4.9% from December, landing at a seasonally adjusted annual rate of 4.08 million units, as reported by the National Association of Realtors. Meanwhile, home prices continued to rise annually for the 19th month straight, with the national median sales price in January increasing by 4.8% from the previous year to $396,900.
Last year saw U.S. home sales hit their lowest in nearly three decades.
Home Depot recorded a profit of $3 billion, or $3.02 per share, for the quarter ending February 2, compared to $2.8 billion, or $2.82 per share, during the same period last year. When excluding specific items, earnings amounted to $3.13 per share, surpassing Wall Street’s forecast of $3.04 per share.
Looking forward, Home Depot anticipates a decline of about 2% in fiscal 2025’s adjusted earnings per share from $15.24 in fiscal 2024, while expecting sales growth to be around 2.8%.
