Home Depot Affirms 2024 Guidance While Posting Earnings Beat, Sales Miss

Home Depot’s (HD) first-quarter results released Tuesday included an earnings beat but slight revenue miss, as the company is still suffering from customers putting off larger projects and purchases.

‘Continued Softness in Certain Larger Discretionary Projects’

Home Depot narrowly missed consensus revenue estimates, with total sales declining to $36.42 billion from last year’s mark of $37.26 billion, below the $36.65 billion analysts expected, according to Visible Alpha.

However, the home improvement retailer did beat income estimates, recording $3.6 billion in profits, or $3.63 per share, compared to the $3.55 billion and $3.58 per share analysts expected. Profit fell 7% year-over-year from the first quarter of 2023 despite sales only slipping 2.3%.

“While the quarter was impacted by a delayed start to spring and continued softness in certain larger discretionary projects, we feel great about our store readiness, our product assortment in stores and online, and our associate engagement,” Chief Executive Officer (CEO) Ted Decker said.

In previous quarters, Home Depot said it had seen big-ticket transactions—defined as those over $1,000—fall as inflation and interest rates remaining persistently high have forced many consumers to put off larger purchases or home improvement projects. The company is also grappling with a decrease in home improvement spending after millions of Americans staying at home during the pandemic caused a spike in those projects.

Affirms 2024 Guidance, Looks Ahead To Closing of SRS Deal

Home Depot also affirmed its full-year guidance for fiscal 2024, which includes 53 weeks of operating results, projecting total sales to increase about 1% compared with fiscal 2023 despite a likely 1% drop in 52-week comparable store sales. The company expects to open about 12 new locations this year, and projects 53-week earnings per share (EPS) to also increase by about 1%.

The 2024 guidance does not include one yet-to-be-closed acquisition that could boost Home Depot’s earnings reports next year and beyond, the $18.25 billion deal announced in March to buy SRS Distribution, which distributes roofing materials and other construction products to a network of contractors.

Decker and other executives said at the time and in the company’s February earnings call that while inflation is forcing consumers to put off larger purchases, Home Depot’s focus will be on increasing its market share among the professional contractor market, which the SRS acquisition should do once it closes by the end of this year.

They also said a priority will be growing Home Depot’s footprint by opening new stores and warehouses that could ship large orders directly to construction sites, another strategy to boost the pro market.

Shares were down 0.6% to $338.90 as of 11:40 a.m. ET Tuesday.