Consumers have been spending less money this summer on sprucing up their homes, and that’s likely to decline even further in the coming months. Home Depot $HD (HD) is bracing for the slowdown.
The home improvement retailer, which kicked off a big retail earnings season, reported second-quarter earnings on Tuesday that showed shoppers are still still dealing with inflation, high interest rates, and economic uncertainty. Home Depot stock fell slightly in premarket trading after the retail giant slashed its full-year sales outlook, citing lagging consumer demand for DIY projects.
“During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects,” Ted Decker, Home Depot’s CEO, said in a statement.
The Atlanta-based company expects comparable sales for 2024 to decline between 3% and 4%. It had previously forecasted a 1% decline. And it now expects total sales to increase between 2.5% and 3.5%.
Home Depot beat Wall Street’s earnings expectations. During the second quarter, it reported revenue of $43.18 billion, about $4.67 earnings per share. Analysts had forecast it would generate, $42.52 billion in revenue, roughly $4.53 earnings per share, according to FactSet.
But even so, Home Depot got a modest boost from its recent acquisition of SRS Distribution, which it purchased for a hefty $18 billion earlier this year. Of the company’s total sales during the second quarter, SRS Distribution contributed $1.3 billion. In April, Home Depot’s CFO said the deal with SRS Distribution would open it up to new customers, including those that work in areas of roofing, landscaping, and pool contracting.