Home Depot Reports Biggest Quarterly Sales Miss In Over 20 Years

Home Depot (HD) shares fell on Tuesday after the largest U.S. home improvement retailer had its biggest quarterly sales miss in more than two decades, and cut its full-year guidance.

Home Depot reported first quarter revenue slumped 4.2% to $37.26 billion, about $1 billion short of analysts’ forecasts. Comparable store sales dipped 4.5%, and U.S. comparable store sales slid 4.6%, both worse than expected. Earnings per share (EPS) declined 6.6% to $3.82, slightly higher than estimates. 

The company has been impacted by a slowdown in demand following the boom in home renovation during the COVID-19 lockdowns. CEO Ted Decker noted that after three years of “unprecedented growth, we expected fiscal 2023 to be a year of moderation of the home improvement market.”

He explained that Home Depot saw “more broad-based pressure across the business” as compared to the previous quarter. He added that sales were hit especially hard by falling lumber prices and unfavorable weather, particularly in the West. 

Reduced Outlook

CFO Richard McPhail said because of 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,” the company was cutting its outlook. Home Depot now sees 2023 sales and comparable store sales dropping between 2% and 5%, down from its previous guidance of roughly unchanged. It also reduced anticipated operating margin from 14.5% to a range of 14% to 14.3%. 

Shares of Home Depot fell 1.5% in early trading on Tuesday morning. Shares of rivals Lowe’s (LOW) and Tractor Supply (TSCO) declined as well.