On a call with CNBC, Chief Financial Officer Richard McPhail said demand dipped throughout the year as consumers returned to more typical spending patterns. He added that falling lumber prices and rising interest rates hurt the business.
Home Depot now sees a chance to return to growth, McPhail said.
“Our market is on its way back to normal demand conditions,” he said. “We’re not quite there yet, but the pressures we saw in 2023 are receding.”
Here’s what the company reported for the three-month period ended Jan. 28 compared with what Wall Street expected, based on a survey of analysts by LSEG, formerly Refinitiv:
- Earnings per share: $2.82 vs. $2.77 expected
- Revenue: $34.79 billion vs. $34.64 billion expected
Home Depot shares more than 3% in premarket trading.
Net income for the fiscal fourth quarter fell to $2.80 billion, or $2.82 per share, from $3.36 billion, or $3.30 per share, a year earlier.
Net sales decreased from $35.83 billion in the year-ago period.
Home Depot has faced a tougher sales backdrop over the past year. The home improvement retailer is following a more than two-year period when Americans had more time and money to spend on painting and fixing up their homes during the pandemic.
The company has also felt a pullback in consumer spending, particularly on big-ticket items, as some families postpone discretionary purchases because of inflation, put off buying a new home because of higher interest rates or choose to spend on experiences rather than goods.
Throughout the past year, McPhail and CEO Ted Decker described 2023 as “a year of moderation” after the outsized gains during the pandemic.
On Tuesday, McPhail said customers are still putting off bigger projects – especially the large-scale projects that may require a loan – because of higher borrowing costs.
Yet he said sales throughout the fourth quarter were pretty consistent, except for a decline in January due to colder and wetter weather. He said that temporary drop did not factor into the company’s outlook for the year ahead.
Average ticket and customer transactions both declined in the fourth quarter compared with the year-ago period. Average ticket dropped to $88.87 from $90.05 in the year-ago quarter, reflecting a more typical pricing environment, McPhail said.
As of Friday’s close, shares of Home Depot were up nearly 5% this year. That roughly matches the gains of the S&P 500 during the same period. The company’s shares closed at $362.35 on Friday, bringing Home Depot’s market value to about $360 billion.
This story is developing. Please check back for updates.
Barbara Terrio is a seasoned business journalist, delving into the world of finance, startups, and entrepreneurship. With a knack for demystifying complex economic trends, she helps readers navigate the business landscape. Outside of her reporting, Barbara is an advocate for financial literacy and enjoys mentoring aspiring entrepreneurs.
