Home Depot reported lower sales on Tuesday for the first quarter of the year. Company officials blamed bad weather for the disappointing performance compared to last year.
Weather Blamed for Home Depot's Sales Slump
Home Depot reported a decrease in sales for the first quarter of 2024, announcing revenues of $36.4 billion, down 2.3% from last year. The company's press release highlighted a 2.8% drop in comparable sales overall, with a steeper 3.2% decline in U.S. sales.
According to a CNBC report, this marks the sixth consecutive quarter of falling comparable sales, as fewer customers visited Home Depot during the early months of the year. When shoppers made online or in-store purchases, they spent less money than before.
Home Depot's Chair, President and CEO Ted Decker attributes the disappointing results primarily to weather-related issues. "The quarter was impacted by a delayed start to spring and continued reluctance in undertaking larger discretionary projects," Decker explained.
Despite these challenges, Decker commended his staff for maintaining market share growth. "We feel great about our store readiness, product assortment, and associate engagement," he stated.
Decker also expressed his gratitude towards the employees for their dedication to customer service as the season progresses.
Home Depot's Chief Financial Officer, Richard McPhail, echoed this sentiment during his discussion with CNBC. He emphasized that spring is a critical sales period for the retailer and noted an improvement in sales as the weather has begun to warm up.
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Home Depot CFO Eyes Mortgage Rate Impact
According to The U.S. Sun, Home Depot's CFO Richard McPhail has linked the current rise in mortgage interest rates to a slowdown in home improvement projects. Due to the climbing rates, homeowners are postponing renovations and relocations, leading to a dip in sales for the retailer.
McPhail described the home improvement customer as financially robust, noting that the issue isn't their purchasing power. "They tell us they're just simply deferring these projects because given higher rates, it just doesn't seem the right moment to execute," he explained.
He observed that slight decreases in mortgage rates have historically led to increased housing activity and home improvement spending.
"We think that's an indicator that there is a tremendous amount of pent-up demand for household formation, housing turnover, and the larger projects associated with housing turnover," McPhail added.
As Home Depot navigates these challenging sales conditions, the company has shifted its focus towards professional customers who buy in bulk and provide steady business. It is expanding its network of distribution centers to deliver directly to job sites for contractors like roofers.
Simultaneously, the retailer is enhancing its appeal to DIY enthusiasts by opening new stores and integrating advanced technology to improve the shopping experience.
Despite the sluggish quarterly results, Home Depot maintains a stable outlook for 2024. It expects a modest sales increase of about 1% over the year, which includes an additional week compared to 2023. However, excluding the extra days, comparable sales are anticipated to decrease by 1%.
Home Depot operates 2,337 stores across the U.S., Puerto Rico, the Virgin Islands, Guam, Canada, and Mexico, employing around 465,000 people. Its stock is listed on the NYSE under the ticker HD and is part of the Dow Jones and S&P 500 indices.
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