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Home Depot’s Revenue Falls Short of Expectations
Home Depot, the largest home improvement retailer in the United States, reported $36.4 billion in revenue for its first fiscal quarter of 2024. This figure fell below Wall Street’s expectations, highlighting a shift in consumer behavior towards smaller-scale home repairs rather than larger renovation projects.
Economic Factors Impacting Spending
The company’s revenue figures for the three-month quarter ending in April 28 came in lower than analysts’ projections of $36.66 billion. However, earnings per share slightly exceeded expectations at $3.63 per share compared to the anticipated $3.60 per share. The discrepancy in revenue can be attributed to higher inflation rates and borrowing costs, which have deterred customers from investing in more significant home upgrades and large discretionary purchases.
In a statement to CNBC last November, Home Depot’s chief financial officer acknowledged that consumers were opting to downsize their projects in response to economic uncertainties.
Store Readiness and Future Outlook
Despite the challenges faced in the first quarter, Home Depot CEO Ted Decker expressed confidence in the company’s preparedness, product offerings, and employee engagement. Customer transactions at Home Depot locations, both physical stores and online, decreased by 1% to $386.8 million, a notable improvement from the 4.8% decline reported in the same period in 2023.
The average purchase ticket also experienced a marginal decline of 1.3% to $90.68. Additionally, comparable sales continued to drop for the sixth consecutive quarter, with a 2.8% decrease in Home Depot’s first fiscal quarter of 2024, slightly surpassing analysts’ projections of a 2.09% decline.
Future Projections and Stock Performance
Despite these challenges, Home Depot reaffirmed its fiscal year 2024 targets, expecting total sales to increase by approximately 1%. The company attributes this growth partially to the inclusion of an additional week in its fiscal calendar, projected to contribute $2.3 billion in sales. Excluding this extra week, Home Depot foresees comparable sales declining by about 1%.
Following the earnings report, Home Depot’s stock experienced a minimal increase in pre-market trading, reflecting continued investor confidence in the retailer’s long-term prospects.
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