By MICHELLE CHAPMAN, AP Business Writer
Home Depot’s sales improved during its fiscal second quarter as consumers remained focused on smaller projects amid cost concerns and economic uncertainty, but its performance missed Wall Street’s expectations.
Revenue for the three months ended August 3 climbed to $45.28 billion from $43.18 billion, but fell short of the $45.41 billion that analysts polled by FactSet were looking for.
Sales at stores open at least a year, a key indicator of a retailer’s health, rose 1%. In the U.S., comparable store sales increased 1.4%.
Home Depot’s stock surged more than 4% in Tuesday morning trading.
Neil Saunders, managing director of GlobalData, said that Home Depot saw consumers concentrating on smaller projects and gardening during the quarter.
“As the largest improvement player, Home Depot is getting the lion’s share of this growth and remains the number one destination for consumers due to strong customer service, a comprehensive range, and sharp pricing,” he said. “The latter factor will serve it well as consumers become more price conscious.”
Customer transactions declined less than 1% in the quarter. The amount shoppers spent rose to $90.01 per average receipt from $88.90 in the prior-year period.
“Our second quarter results were in line with our expectations. The momentum that began in the back half of last year continued throughout the first half as customers engaged more broadly in smaller home improvement projects,” said Ted Decker, chair, president and CEO. “Our teams are executing at a high level and we continue to grow market share. I would like to thank our associates for their continued hard work and dedication.”
Home improvement retailers like Home Depot have been dealing with homeowners putting off bigger projects because of increased borrowing costs and lingering concerns about inflation.
The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows.
Sales of previously occupied homes have slumped as elevated mortgage rates and rising prices discourage home shoppers.
Sales of such homes in the U.S. slid in June to the slowest pace since last September as mortgage rates remained high and the national median sales price climbed to an all-time high of $435,300.
Home sales fell last year to their lowest level in nearly 30 years.
Home Depot earned $4.55 billion, or $4.58 per share, for the second quarter. A year ago, the Atlanta-based company earned $4.56 billion, or $4.60 per share.
Removing certain items, earnings were $4.68 per share. Wall Street was looking for earnings of $4.72 per share.
The company reaffirmed its fiscal 2025 forecast for total sales growth of about 2.8%. It still expects adjusted earnings to decline about 2% from $15.24 per share a year earlier.
Fiscal 2025 Guidance
The company reaffirms its guidance for fiscal 2025, a 52-week year compared to fiscal 2024, a 53-week year.
- Total sales growth of approximately 2.8%
- Comparable sales growth of approximately 1.0% for the comparable 52-week period
- Approximately 13 new stores
- Gross margin of approximately 33.4%
- Operating margin of approximately 13.0%
- Adjusted¹ operating margin of approximately 13.4%
- Tax rate of approximately 24.5%
- Net interest expense of approximately $2.2 billion
- Diluted earnings-per-share to decline approximately 3% from $14.91 in fiscal 2024
- Adjusted¹ diluted earnings-per-share to decline approximately 2% from $15.24 in fiscal 2024
- Capital expenditures of approximately 2.5% of total sales
¹ The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). As used in this earnings release, adjusted operating income, adjusted operating margin, and adjusted diluted earnings per share are non-GAAP financial measures. Refer to the end of this release for an explanation of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures.
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