Updated at 6:13 am EDT
Home Depot (HD) – Get Free Report shares slumped lower Tuesday after the home improvement retailer posted weaker-than-expected first quarter sales and trimmed its full-year profit forecast amid a pullback in consumer spending on domestic projects.
Home Depot said earnings for the three months ending in April, the company’s fiscal first quarter, were pegged at $3.82 per share, down 6.6% from the same period last year but 2 cents ahead of the Street consensus forecast. Group revenues, Home Depot said, fell 4.2% from last year at $37.26 billion, missing analysts’ estimates of a $38.3 billion tally.
Same store sales were down 4.5% from last year, Home Depot said, while comparable sales in the U.S. were down 4.6%, a figure that also missed Street forecasts. Average tickets rose 0.2% per trip to $91.92, while the number of individual transaction slowed by around 4.8%.
Looking into the 2023 fiscal year, which ends next January, Home Depot lowered its overall earnings forecast to a decline of between 7% and 13% compared to its prior forecast of a ‘mid single digit’ decline, with comparable sales down between 2% and 5%.
“After a three-year period of unprecedented growth for our sector, during which we grew sales by over $47 billion, we expected that fiscal 2023 would be a year of moderation for the home improvement market,” said CEO Ted Decker. “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.”
“We also observed more broad-based pressure across the business compared to when we reported fourth quarter results a few months ago,” Decker added. “While the near-term environment is uncertain, we remain very positive on the medium-to-long term outlook for home improvement and our ability to grow share in a large and fragmented market.”.
Home Depot shares were marked 4.3% lower in pre-market trading immediately following the earnings release to indicate an opening bell price of $276.13 each.