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Shares of Home Depot, which have gained 12.4% this year, dropped
nearly 3% in premarket trading, as the company also scrapped its
full-year outlook, citing uncertainties stemming from the
pandemic.
Home Depot, which is heavily reliant on a solid housing market
to drive sales, is at risk of a potential drop in home
improvement spending this year as lockdown measures to control
the spread of the novel coronavirus batter the economy.
Homebuilding activity collapsed in March at a speed not seen in
36 years.
Still, shelter-in-place restrictions and government stimulus
checks had an initial benefit on Home Depot's sales as people
spent more on tools for do-it-yourself house projects, such as
small repairs, painting and gardening.
The company also saw a surge in demand for cleaning supplies,
but was forced to cut operating hours and limit the number of
customers allowed in stores to maintain social distancing.
The risks posed to staff working through the crisis led the
company to provide additional bonuses, double pay for overtime
and add more hours of paid time-off.
The company's net earnings fell 10.7% to $2.25 billion, or $2.08
per share, in the first quarter ended May 3, while analysts had
expected earnings of $2.27 per share, according to IBES data
from Refinitiv.
Total net sales rose to 7.1% to $28.26 billion, beating
estimates of $27.54 billion. Same-store sales rose 6.4%.
The company also declared a first-quarter cash dividend of $1.50
per share.
(Reporting by Uday Sampath in Bengaluru; Editing by Shinjini
Ganguli and Saumyadeb Chakrabarty)
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