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Shares of the Dow component fell 4% in premarket trading after
the company also reported a bigger drop in comparable sales than
expected for the second quarter.
"During the quarter, higher interest rates and greater
macroeconomic uncertainty pressured consumer demand more
broadly, resulting in weaker spend," CEO Ted Decker said.
Customers delayed big-scale projects such as flooring, kitchen
cabinets and bath to tackle steep inflation, even as higher
mortgage rates and home prices hurt new homes sales.
Weak new home sales in May and June led to foot traffic dropping
0.4% in July after a 4.3% rise in June, according to data from
Placer.ai.
Home Depot expects annual comparable sales to drop between 3%
and 4%, compared with its prior view of a nearly 1% decline.
Comparable sales in the second quarter fell 3.3%, steeper than
expectations of a 1.98% decline, according to LSEG data, while
customer transactions fell 1.8%, its 13th straight quarter of
drop.
"...continued pressure on average ticket hurt sales a little
bit, but ultimately it's the volume number that's a little bit
more disappointing," said John Tomlinson, global director of
research at M Science.
The retailer expects diluted earnings per share to decline
between 2% and 4%, compared with a prior forecast of a nearly 1%
rise. Adjusted earnings per share of $4.67 for the reported
quarter was a tad below $4.68 a year ago.
Shares of rival Lowe's, which is expected to report results next
week, fell 3% before the bell. Retail bellwether Walmart will
report earnings on Thursday.
"Depending on the type of retailer, you're going to see more
conservative viewpoints towards the back half of the year, given
I think there is probably a softening in overall consumer
demand," Tomlinson said.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Arun
Koyyur)
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