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%.
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," Chair and CEO Ted Decker said in a statement on Tuesday. "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.”
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.
