Home Depot continued to experience a decline in customer spending in the third fiscal quarter, but it was less severe than in the past and performance exceeded Wall Street expectations. The home improvement retailer also raised its full-year revenue outlook.
The Atlanta-based company’s revenue improved 6.6% to $40.22 billion in the quarter. That was more than the $39.31 billion that analysts polled by FactSet had forecast.
Turnover in stores that have been open for at least a year, an important indicator of a retailer’s health, fell by 1.3%. In the US the figure fell by 1.2%. Still, that’s a clear improvement compared to the second quarter, when sales at stores open at least a year fell by 3.3% and in the US by 3.6%.
The number of customer transactions in the third quarter remained virtually flat compared to the same period last year, while the amount shoppers spent decreased slightly to $88.65 per average ticket, compared to $89.36 a year earlier.
Home improvement retailers such as Home Depot have been dealing with homeowners delaying larger projects due to higher rates and lingering concerns about inflation.
While mortgage rates have recently begun to fall, the U.S. housing market is in a sales slump dating back to 2022, when mortgage rates began rising from pandemic-era lows.
Last month, the National Association of Realtors reported that existing home sales fell 1% in September, compared to August, to a seasonally adjusted annual rate of 3.84 million. That marked the second straight monthly decline and the slowest annual sales pace since October 2010, when the housing market was still in a deep slump following the real estate crash of the late 2000s.
Home Depot Inc. earned $3.65 billion, or $3.67 per share, for the period ended Oct. 27. A year earlier, it earned $3.81 billion, or $3.81 per diluted share.
Excluding certain items, earnings were $3.78 per share. Wall Street demanded $3.65 per share.
“While macroeconomic uncertainty remains, our third quarter performance exceeded our expectations,” Ted Decker, chairman, president and CEO, said in a statement Tuesday. “As the weather normalized, we saw better engagement with seasonal products and certain outdoor projects, as well as an increase in sales related to hurricane demand.”
Home Depot now expects full-year sales to rise about 4%. The previous expectation was that turnover would increase by 2.5% to 3.5%. The chain now expects sales in stores that have been open for at least a year to decline by about 2.5%. The company previously predicted that annual sales at stores open at least a year would decline between 3% and 4%.
Additionally, Home Depot forecasts that earnings per share will decline by about 2% and adjusted earnings per share will decline by about 1%. Previous expectations were that earnings per share would decline between 2% and 4%.
In premarket trading, shares of Home Depot rose 2.1%.
