Home Depot sees sales decline
The Home Depot (HD), based in Atlanta, reported lower Q1 sales and profits.
“Our sales for the quarter were below our expectations primarily driven by lumber deflation and unfavorable weather, particularly in our Western division as extreme weather in California disproportionately impacted our results” said Ted Decker, chair, president and CEO.
In the retailer’s Q1 earnings conference call, Billy Bastek, EVP merchandising at Home Depot added, “framing lumber was down 64% compared to orders received in last year’s first quarter.”
[Related article: Home Depot opens warehouses in California to speed community help.]
The company reported sales of $37.3 billion for the first quarter of fiscal 2023, a decrease of 4.2% from the first quarter of fiscal 2022. Comparable sales for the first quarter of fiscal 2023 decreased 4.5%, and comparable sales in the U.S. decreased 4.6%.
Net earnings for the first quarter of fiscal 2023 were $3.9 billion, or $3.82 per diluted share, compared with net earnings of $4.2 billion, or $4.09 per diluted share, in the same period of fiscal 2022.
The Bottom Line: Home Depot sales for the first quarter decreased 4.2% company-wide to just over $37 billion.
What the CEO said: “After a three-year period of unprecedented growth for our sector, during which we grew sales by over $47 billion, we expected that fiscal 2023 would be a year of moderation for the home improvement market. We also observed more broad-based pressure across the business compared to when we reported fourth quarter results a few months ago,” said Decker.
Also, Richard McPhail, executive vice president and chief financial officer for Home Depot said, “given the negative impact to first quarter sales from lumber deflation and weather, further softening of demand relative to our expectations, and continued uncertainty regarding consumer demand, we are updating our guidance to reflect a range of potential outcomes."
The company is providing the following updated guidance for fiscal 2023:
• Sales and comparable sales to decline between 2% and 5% compared to fiscal 2022;
• Operating margin rate to be between 14.3% and 14.0%;
• Tax rate of approximately 24.5%;
• Interest expense of approximately $1.8 billion;
• Diluted earnings-per-share-percent-decline between 7% and 13% compared to fiscal 2022.
At the end of the first quarter of 2023, the company reported it operated a total of 2,324 retail stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico, and employs approximately 475,000 associates.
Company info: Click HERE to read the Q1 2023 full financial report from Home Depot.
