Home Depot on Tuesday stuck by its full-year sales forecast as a top executive told CNBC the retailer won’t hike prices because of tariffs.
In the fiscal first quarter, comparable sales dropped 0.3% across the company.
In the U.S., comparable sales increased 0.2% year over year.
Home Depot snapped eight consecutive quarters of falling comparable sales in the fourth quarter.
In that quarter, comparable sales increased 0.8% across the company.
On Tuesday, a senior executive told CNBC that Home Depot would not raise prices due to tariffs, maintaining its full-year sales projection.
In an interview with CNBC, McPhail stated, “We intend to generally maintain our current pricing levels across our portfolio because of our scale, the great partnerships we have with our suppliers, and productivity that we continue to drive in our business.”.
The United States accounts for more than half of the company’s sales. S. . he stated. “Over the past few years, Home Depot and its suppliers have worked to diversify the source of the company’s imports, including by decreasing the share of purchases that come from China,” McPhail continued. A year from now, no nation outside of the U.S. A. will amount to over ten percent of the business’s purchases, he stated.
Walmart, which stated last week that it would have to raise prices as early as late May to cover higher costs from tariffs, disagrees with Home Depot’s pricing strategy.
After weeks in which a number of companies either retracted or revised their financial guidance in response to President Donald Trump’s rapidly shifting tariffs, McPhail’s remarks were made as Home Depot released its first quarter results. Despite exceeding sales projections, the home improvement store missed Wall Street’s first-quarter earnings expectations for the first time since May 2020.
According to Home Depot, it anticipates a 2 percent increase in total sales and a 1 percent increase in comparable sales, which do not include the effects of one-time events like store openings and calendar discrepancies. Its prediction is predicated on a U continuing. A. the temporary reduction of import duties to 30% for Chinese goods and 10% for goods from many other nations.
LSEG conducted an analyst survey and compared Home Depot’s fiscal first quarter results with Wall Street’s projections.
Compared to the expected $3.60, adjusted earnings per share were $3.56.
Revenue: $39.86 billion as opposed to… Expected: $39–31 billion.
Before the market opened, the company’s stock increased by over 2 percent.
During the three months ending May 4, Home Depot’s net income was $343 billion, or $345 per share, as opposed to $360 billion, or $363 per share, during the same period last year. Depreciation from acquired intangible assets is one of the costs that are not included in adjusted earnings per share.
As the weather gets warmer and drier, more projects are usually undertaken by homeowners and contractors, making spring the Christmas of home improvement and Home Depot’s busiest sales season. Even so, Home Depot’s environment is still challenging as more U.S. S. . Higher mortgage rates and borrowing costs cause consumers to put off major renovation projects or home purchases.
The increase in sales has been slow. The company’s comparable sales fell 0.3 percent in the first quarter of the fiscal year. In the United States… A. Year-over-year, comparable sales rose 0.2 percent.
Except for the last quarter, that trend has continued. In the fourth quarter, Home Depot ended eight consecutive quarters of declining comparable sales. The company’s comparable sales rose 0.8 percent during that quarter.
According to McPhail, sales trends improved as the quarter progressed. According to him, comparable sales fell 3 percentage points year over year in February, rose 1 percentage point year over year in March, and increased 1 percentage point year over year in April.
He blamed bad weather in February for February’s poor sales figures.
He stated, “We had a great April and clawed our way back through the remainder of the quarter, and we’ve seen the level of customer engagement that we saw in April continue into the first few weeks of May.”.
More home professionals are doing business with Home Depot as the company faces a more difficult housing environment. In a $18.25 billion deal last year, it purchased SRS Distribution, a Texas-based business that supplies roofing, pool, and landscaping professionals.
Home Depot’s sales, including SRS, increased by about 9% year over year in the first quarter from $36.42 billion in the same period last year. A portion of the sales growth came from new stores, and SRS’ business accounted for about $2.06 billion of that year-over-year gain, McPhail told CNBC.
Home Depot’s online and in-store customer transactions increased 23.1 percent in the first quarter of the fiscal year. The average ticket, which calculates how much was spent on those in-store or online visits, was $90.71, which was only a few cents more than the average for the same quarter last year.
Home Depot targets a wealthier U.S. market than other retailers. S. consumer who has profited from the significant rise in property values since 2019, McPhail said, and who typically has a job. Approximately 80% of its clientele are homeowners, he said, and the home professionals that purchase from Home Depot serve homeowners who employ them to complete tasks ranging from kitchen renovation to roofing and electrical work.
He stated, “We believe that our customer’s level of involvement in home improvement has been bolstered by their good health.”.
Nevertheless, McPhail stated that do-it-yourselfers are more likely to put off larger projects in favor of smaller, spring-related ones.
Home Depot’s spring Black Friday event was well received, and McPhail reported that the company’s appliance, garden, plumbing, and electrical departments saw robust sales. However, he added that sales have been weaker in categories like bathroom and kitchen countertops, which are typically bought as part of more expensive projects like remodels and renovations.
Home Depot’s stock is down roughly 2 percent so far this year as of Monday’s close. That is less than the SandP 500’s gains of about 1% over the same time frame. At Monday’s closing price of $379.38, its market value was approximately $377 billion.
This report was contributed to by Robert Hum of CNBC.
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