Home Depot shares tumble on disappointing earnings and dim outlook

Home Depot Inc (NYSE:HD) shares plunged as much as 5.5% after the company cut its full-year guidance and reported quarterly comparable sales that fell short of analysts’ expectations. The leading home-improvement retailer attributed the sales slump to softening consumer demand, lumber deflation, and unfavorable weather conditions, especially in California.

Home Depot shares tumble on disappointing earnings and dim outlook

© Reuters
Home Depot shares tumble on disappointing earnings and dim outlook

In response to the news, shares in competitor Lowe’s (NYSE:LOW), set to report results on May 23, also declined.

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For the fiscal year 2024, Home Depot now expects comparable sales to decline between 2% and 5%, compared to a previous forecast for them to remain almost flat. The company also anticipates sales to fall within the same range, while operating margins are projected at 14% to 14.3%, lower than the estimated 15.5%. Earnings per share are forecast to decrease by 7% to 13%.

The first quarter results revealed a larger than expected comparable sales decline of 4.5% compared to a 2.2% increase year-over-year. Earnings per share for the first quarter stood at $3.82, down from $4.09 in the same period a year prior, but slightly above the estimated $3.80.

“Our sales for the quarter were below our expectations primarily driven by lumber deflation and unfavorable weather, particularly in our Western division as extreme weather in California disproportionately impacted our results,” said Ted Decker, chair, president and CEO.

–This article was written with assistance from AI

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