Home Depot Cuts Its Outlook After Years Of Explosive Growth

(CTN News) – Shares of Home Depot fell Tuesday before the opening bell after years of explosive growth during the pandemic, and the company cut its profit and sales outlook for the year.

Home Depot improvement stocks and the Dow both suffered a rough start to a busy retail earnings week.

The company’s revenue for the three months ended April 30 decreased to $37.26 billion from $38.91 billion last year, according to Zacks Investment Research.

A key indicator of a retailer’s health is sales at stores open at least a year, which dropped 4.5% and 4.6% respectively.

After a three-year period of unprecedented growth, during which Home Depot improvement sales grew by over $47 billion, CEO Ted Decker predicted that fiscal 2023 would be a year of moderate growth.

Decker blamed bad weather and lumber deflation for its weak sales, particularly in its Western division in California, which was affected by extreme weather.

With the economy slowing and Home Depot prices rising, Atlanta’s company reduced its year-end expectations.

With the goal of slowing the economy and cooling inflation, the Federal Reserve has raised interest rates ten consecutive times.

Throughout January and March, the U.S. economy slowed sharply as higher interest rates dragged down the housing market and businesses reduced inventories. After increasing 3.2% between July and September and 2.6% between October and December, the Commerce Department estimated last month that the nation’s gross domestic product weakened.

According to Home Depot, profits will slip this year. Due to the pandemic, many people stayed at home or looked for a new Home Depot over the past three years. It is common for Americans to spend a lot of money on home renovations and other projects.

In the wake of the easing of the pandemic, Americans began to spend on things that had declined in recent years, such as vacations and dinners out.

The company earned $3.87 billion in the third quarter of this year, or $3.82 per share. There were $4.23 billion in earnings in the previous year, which equates to $4.09 per share. In terms of earnings per share, they were higher than expected by industry analysts, who had expected a figure of $3.80 per share from the company.

As a result, Home Depot Inc. is now anticipating that sales and same-store sales in the coming year will decline between 2% and 5%. In an announcement several months ago, the company said it expected its sales in 2022 to remain flat compared to last year.

The chain now expects earnings to decline between 7% and 13% for the full year, which represents an expanded decline from earlier expectations that earnings would fall in a solid range of single digit percentages for the entire year.

There was a drop of more than 3% in shares before Tuesday’s market opened.

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