Home Depot (HD) Q2 2024 Earnings

Home Depot Its quarterly results on Tuesday beat expectations but warned that sales would fall short of expectations in the second half of the year as high interest rates and consumer uncertainty dampened demand.

The home improvement retailer said it now expects full-year comparable sales to fall 3% to 4% from the prior fiscal year. It had previously expected comparable sales, a metric that strips out the impact of store openings and closings and other one-time factors, to fall about 1%.

Home Depot’s total annual sales will be Recently completed the acquisition of SRS Distribution, A company that sells supplies to professionals in the landscaping, roofing or pool industries. It expects total sales to increase by 2.5% to 3.5%, including the 53rd week of the fiscal year and about $6.4 billion in sales from SRS. However, its new full-year forecast would equate to less revenue if it excludes sales from SRS.

Home Depot has been struggling with consumers with a “deferral mentality” since mid-2023, Chief Financial Officer Richard McPhail told CNBC in an interview. Interest rates have led them to put off buying and selling homes and borrowing money for bigger projects like kitchen remodels.

However, in the past quarter, he said, surveys of home professionals, including customers and contractors, have shown has seized upon another challenge: more cautious consumers.

“Professionals are telling us that this is the first time their clients are deferring payments not just because of higher financing costs,” he said. “They are deferring payments because they feel the economy is more uncertain.”

Here’s how the company’s results for the three months ended July 28 compared with Wall Street expectations, according to a London Stock Exchange survey of analysts:

• Earnings per share: $4.60 per share vs. $4.49 expected

• income: $43.18 billion, higher than the expected $43.06 billion

Home Depot has ridden a wave of retail earnings as economists, investors and politicians closely monitor the health of the U.S. consumer and try to predict the economic outlook, including the possibility of a recession. While inflation has cooled, rising prices — especially for everyday costs such as groceries, energy and housing — have slowed. Continue to disappoint customers. They also become A major talking point in the 2024 campaign.

Consumer leads will continue to emerge this week and next as Walmart On Thursday, the government releases earnings and retail sales data. Other retailers, including Target, Macy’s and Best Buywill also announce the results in the coming weeks.

Home Depot has a more financially stable customer base than many other retailers. Half of its sales come from home professionals and half from do-it-yourself customers. About 90% of these do-it-yourself customers own their own homes.

However, Home Depot is still feeling the effects of consumer uncertainty, said McPhail, who said the company has seen a slowdown in demand for a range of project-driven products, including lighting and flooring.

Home Depot’s second quarter net income Down to $4.56 billion, or $4.60 per share, compared with $4.66 billion, or $4.65 per share, in the same period last year.

Revenue was up slightly from $42.92 billion in the same period last year.

According to StreetAccount, comparable sales fell 3.3% industrywide in the quarter and fell 3.6% in the U.S. market, a larger drop than the 2.1% drop analysts expected.

This is the seventh consecutive quarter that Home Depot has experienced negative same-store sales growth.

However, the company highlighted a bright long-term outlook for home improvement, citing the country’s aging housing stock, housing shortages and a sharp rise in property values, especially during the pandemic.

Even though Home Depot customers are spending less on home improvements right now, they are still in good financial shape and have jobs, McPhail said.

Home Depot shares closed at $345.81 on Monday. As of Monday’s close, the company’s shares were down less than 1% so far this year, lagging the S&P 500’s 12% gain.

– CNBC’s Robert Hum contributed to this article.