Home Depot Plunges After Worst Revenue Miss In 20 Years, Slashes Guidance; Blames Weather, Lumber And Faltering Consumer
Ahead of this week’s earnings-season ending barrage of retail data, analysts and traders were asking if the strong consumer spending momentum from early in the season would carry through or if we would see an uglier side to the US consumer. The answer was delivered moments ago from Home Depot, is decisively the latter.
Home Depot reported its biggest revenue miss in more than 20 years and slashed its outlook for the year as consumers delay large projects and buy fewer big-ticket items like patio sets and grills, the latest sign consumers have maxed out their credit cards after splurging on Weber grills, hot tubs, and patio sets during the pandemic years.
The largest US home improvement chain said comparable sales are expected to decline between 2% and 5% this fiscal year compared with last year, both missing badly the consensus estimate of -0.73%. Home Depot previously forecasted sales would remain flat. It blamed lower lumber prices and bad weather on the rough start to the year.
For the first quarter, comparable sales fell 4.5%, far worse than the expected 1.4% drop, the latest indication that the housing market boom is cooling, which may be a symptom the Federal Reserve’s restrictive monetary policy is working.
Richard McPhail, executive vice president, and chief financial officer, warned about the “continued uncertainty regarding consumer demand.”
Home Depot was the first major retailer to report its first-quarter earnings. Target and TJX Cos. will release earnings on Wednesday. Walmart is on Thursday. On Monday, we shared the latest monthly Consumer Checkpoint report published by Bank of America which showed signs of a slowdown in consumer spending.
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