Home Depot has seen a turnaround in same-store sales for the fourth quarter, marking an end to a two-year slump. This comes as demand from customers has picked up despite the housing market facing challenges from high mortgage rates and a limited inventory of homes. The Atlanta-based company’s revenue increased to $39.7 billion from $34.79 billion, beating the $39.15 billion predicted by analysts.
In its recent announcement, Home Depot revealed that an additional week in the quarter contributed roughly $2.5 billion to sales during this period. The sales at locations open for more than a year—a crucial metric of retail health—rose slightly by 0.8% in the U.S., while comparable store sales increased by 1.3%. This represents the first quarterly hike since January 2023 and contrasts with the anticipated 1.5% decline by Wall Street analysts.
The same-store sales results did not include the extra week of sales. Neil Saunders, GlobalData’s managing director, noted that returning to positive U.S. comparable sales after eight declining quarters is a significant achievement for Home Depot, indicating potential improvement in the overall home improvement market.
Home Depot’s shares increased by over 3% during midday trading. Additionally, customer transactions surged by 7.6%, and the average amount spent per shopping trip rose slightly to $89.11 from $88.87 in the previous year. Ted Decker, Chair and CEO of Home Depot, expressed satisfaction with the fourth-quarter results, attributing them to increased customer engagement in home improvement, even amid the pressure on larger renovation projects. Decker emphasized the company’s commitment to strategic investments aimed at ensuring future success despite economic uncertainties and high interest rates affecting home improvement demand.
Home improvement retailers, including Home Depot, have faced challenges as homeowners delay significant projects due to higher borrowing costs and inflation concerns. The U.S. housing market has been sluggish since 2022 when mortgage rates started climbing from their pandemic-era lows. In the previous month, sales of previously occupied U.S. homes declined as higher mortgage rates and prices deterred potential buyers, though more properties were available.
According to the National Association of Realtors, there was a 4.9% drop in home sales in January from December, translating to a seasonally adjusted annual rate of 4.08 million units. House prices saw an annual increase for the 19th consecutive month, with the national median price reaching $396,900 in January—up 4.8% from the previous year. Last year, sales of previously occupied homes in the U.S. fell to their lowest point in nearly three decades.
During a conference call, Decker mentioned noticing fewer people relocating and delaying necessary repairs and remodeling projects at their current residences. In recent surveys, general macroeconomic and political uncertainty was cited more frequently than high project costs and borrowing rates.
For the three months ending February 2, Home Depot reported earnings of $3 billion, or $3.02 per share, compared to $2.8 billion, or $2.82 per share, the previous year. Excluding specific items, earnings were $3.13 per share, exceeding the expected $3.04 per share by Wall Street.
Looking into the future, Home Depot predicts per-share earnings will decline by about 2% this year, though it expects sales to grow by approximately 2.8%.
