Despite the decline, the company exceeded quarterly expectations.
Home Depot anticipates a decrease in earnings per share between 9% and 11% in 2023.
Home Depot's sales continue to decline due to persistent inflation.
The company expects a fall in same-store sales of 3% to 4%.
This is the first time Home Depot has projected an annual sales decline since 2009.
Home Depot, the largest home improvement chain, has seen a continued decline in sales due to persistent inflation. Despite this, the company has managed to exceed quarterly expectations, leading to a rise in shares by over 6%. Home Depot has revised its outlook for the year, anticipating a decrease in earnings per share between 9% and 11% in 2023 and a fall in same-store sales of 3% to 4%. This marks the first time Home Depot has projected an annual sales decline since 2009.
Inflation has impacted Home Depot in several ways. The average receipt and customer transactions have decreased, and the cost of big-ticket items has risen due to the U.S. Federal Reserve's fight against inflation. The Federal Reserve's raised interest rates have also affected the real estate market, a significant factor in Home Depot's success. The lack of existing homes for sale has forced more people into the new home market or out of the housing market entirely as prices soar, negatively affecting Home Depot.
Customers are focusing on smaller, less expensive projects compared to several years ago when they were undertaking major home renovations. Fewer people are moving homes due to higher mortgage rates, leading to a decrease in home sales. Home Depot reported net income of $3.81 billion, or $3.81 per share, down from $4.34 billion, or $4.24 per share, a year earlier.
Inflation is affecting Home Depot in several ways, including a decrease in average receipt and customer transactions, and the rising cost of big-ticket items due to the U.S. Federal Reserve's fight against inflation.
The Fed's raised interest rates have also impacted the real estate market, which is a significant factor in Home Depot's success.
The lack of existing homes for sale has forced more people into the new home market or out of the housing market entirely as prices soar, negatively affecting Home Depot.