Home Depot rides on smaller remodeling projects to top sales, profit estimates
By Deborah Mary Sophia
(Reuters) -Home Depot on Tuesday reported a smaller-than-expected drop in quarterly same-store sales and topped profit estimates, as Americans spending on small-scale projects countered a pause in larger home remodeling and renovation work.
The top U.S. home-improvement chain's results come ahead of reports from Walmart (NYSE:WMT) and Target later this week, with investors focusing on discretionary spending trends as customers battle sticky inflation and higher borrowing costs.
«While there was strength in categories associated with smaller projects, we did see continued pressure in certain big-ticket, discretionary categories,» Home Depot (NYSE:HD) CEO Ted Decker said.
Big-ticket transactions — or those over $1,000 — dropped 5.5% in the second quarter, with weak demand for one-time purchases like patio furniture and large appliances, Billy Bastek, executive vice president of merchandising, said on an earnings call.
That was cushioned by higher sales of spring season products including plants and landscaping supplies, coupled with steady demand from Pro-customers for products like gypsum, fasteners and insulation.
Quarterly comparable sales fell 2%, while analysts had expected a 3.54% drop, according to Refinitiv IBES data. Its per-share profit of $4.65 also topped estimates of $4.45. The company maintained its annual forecasts.
Shares were 2% higher in early trading with the company announcing a new $15 billion share repurchase program.
«The second-quarter did come out a lot better than we had anticipated. However, the reiterated forecast would imply… Home Depot is still quite cautious despite some initial green shoots in the housing market,» Telsey Advisory Group analyst Joe Feldman said.
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