Home Depot’s sales for the fiscal second quarter slightly increased to $43.18 billion, beating Wall Street expectations.
The sales improvement was partly due to the acquisition of contract supplier SRS Distribution, which contributed $1.3 billion to Home Depot’s sales.
Driving the news: The integration of SRS Distribution is expected to bring sales and bottom-line benefits, and differentiate Home Depot from rivals like Lowe’s in the professional space.
- Home Depot had previously experienced declining sales for three consecutive quarters, primarily due to high mortgage rates, inflation and a delayed start to spring.
- Customer transactions slipped 1.8% in the quarter, while the average ticket amount decreased from $90.07 to $88.90.
- Extreme weather changes during the quarter negatively impacted Home Depot’s ongoing spring projects and resulted in a decline of 3.3% in sales at stores open at least a year.
What we’re watching: Home Depot revised its outlook for 2024, expecting sales decline between 3% and 4% and a fall in full-year earnings per share between 2% and 4%.
- The revised outlook indicates a more negative sentiment around the consumer economy and reflects a more cautious rate cutting stance from the Federal Reserve.
- Home Depot attributes the weaker spend across home improvement projects to higher interest rates and greater macro-economic uncertainty.
- Home improvement retailers, including Home Depot, have been grappling with homeowners postponing larger projects due to higher rates and concerns about inflation.
