The home improvement retailer reiterated that it expects full-year total sales to grow by 2.8% and comparable sales, which take out the impact of one-time factors like store openings and calendar differences, to rise about 1%.
In the three-month period that ended Aug. 3, Home Depot’s net income was $4.55 billion, or $4.58 per share, down slightly from $4.56 billion, or $4.60 per share, in the year-ago period. Revenue rose almost 5% from $43.18 billion in the year-ago period. Adjusting for one-time items, including related to the value of intangible assets, Home Depot reported earnings of $4.68 per share.
The report is Home Depot’s first since May 2014 to fall short on both earnings and revenue expectations.
Home Depot’s results reflect that the company is still waiting for a greater pickup in home improvement activity, whether spurred on by higher housing turnover, lower mortgage rates or consumers’ own shift in mentality.
On the company’s earnings call, CEO Ted Decker said “some relief on mortgage rates, in particular, could help.” But he added that’s not the only factor on consumers’ minds when Home Depot surveys its customers and pros.
As the real estate market remains sluggish and borrowing costs remain high, Home Depot has looked beyond the homeowners who come to its stores to buy kitchen appliances, cans of paint or other supplies for do-it-yourself projects. Home Depot acquired SRS Distribution, a company that sells supplies to roofing, landscaping and pool professionals, for $18.25 billion last year. It announced in June that it was buying GMS, a specialty building products distributor, for about $4.3 billion. The GMS deal is expected to close by the end of Home Depot’s fiscal year in late January, according to Home Depot.
Comparable sales increased 1% across the business and 1.4% in the U.S. during the fiscal second quarter. Home Depot said foreign exchange rates negatively impacted the company’s comparable sales by about 0.4%.
That comparable sales growth marks only the second quarter out of the last 11 that Home Depot has reported year-over-year improvement — marking its strongest performance in more than two years.
Customer transactions across Home Depot’s website and stores fell in the quarter to 446.8 million compared with the 451 million in the year-ago period. Yet shoppers spent slightly more during those transactions, with the average ticket rising to $90.01 from an average ticket of $88.90 in the year-ago period. Those metrics exclude results from acquisitions SRS and HD Supply, the company said.
