Home Depot has navigated a reduction in customer spending during its fiscal third quarter, although the impact was not as pronounced as in previous periods. The performance of the home improvement giant surpassed analysts’ predictions, prompting the company to raise its revenue outlook for the year.
The Atlanta-based retailer reported a 6.6% increase in revenue, amounting to $40.22 billion for the quarter. This figure exceeded the anticipated $39.31 billion projected by analysts collaborating with FactSet.
A critical indicator of a retailer’s performance, sales at stores open for over a year experienced a decline of 1.3%, with a slight decrease of 1.2% noted in the U.S. However, this represents a significant recovery from the second quarter’s performance, where the sales figures dropped 3.3% overall and 3.6% within the U.S.
In the third quarter, customer transactions remained relatively stable compared to the same period last year, although the average spending per shopper decreased slightly from $89.36 to $88.65.
Home improvement retailers, including Home Depot, are facing challenges, as many homeowners are postponing larger projects due to increased interest rates and persistent inflation fears. Despite a recent easing in mortgage rates, the U.S. housing sector has been struggling with declining sales since 2022, following a rise in mortgage rates from the historically low levels witnessed during the pandemic.
The National Association of Realtors reported a 1% decrease in existing home sales in September compared to August, bringing the seasonally adjusted annual rate to 3.84 million—marking the slowest pace since October 2010, during a previous housing market downturn.
For the period ending October 27, Home Depot recorded earnings of $3.65 billion, equivalent to $3.67 per share. In the same quarter of the previous year, it had earnings of $3.81 billion, or $3.81 per diluted share. When excluding certain adjustments, the earnings stood at $3.78 per share, which was higher than Wall Street’s expectation of $3.65 per share.
Ted Decker, the chair, president, and CEO of Home Depot, stated, “Despite ongoing macroeconomic uncertainty, our third-quarter results surpassed our expectations. As weather patterns stabilized, we noticed improved engagement with seasonal merchandise and outdoor projects alongside additional sales connected to hurricane relief.”
The company now predicts a full-year revenue increase of approximately 4%, an upgrade from its earlier forecast of 2.5% to 3.5%. Additionally, it expects a 2.5% decline in sales at stores open for over a year; the previous estimate was a drop of 3% to 4%.
Furthermore, Home Depot anticipates that its earnings per share will see a decrease of about 2%, while adjusted earnings per share are expected to decline by roughly 1%. Initially, the guidance suggested a fall in earnings per share between 2% and 4%.
Following these announcements, Home Depot shares experienced a 2.1% increase during premarket trading.