Even as there are encouraging signs in the housing economy bottoming out, the big DIY chain is still showing a sales slowdown.
If you subscribe to the theory that Home Depot is the canary in the home improvement coal mine – granted a very big canary – then its financial results earlier this month indicate the business is still not very far along on its recovery from the double whammy of high mortgage rates and a housing market slowdown.
Total revenues for the giant DIY retailer fell 2.3 percent to a still sizeable $36.4 billion. That represented a comp-store sales decline of 2.8 percent with U.S. locations declining 3.2 percent.
Still the company is keeping its full-year guidance of about a 1 percent drop in sales and it remained upbeat about its prospects for the balance of the year, saying it “continued to grow market share.” The quarter saw continued emphasis on Depot’s pro business, particularly after the acquisition of SRS Distribution earlier this year, although those numbers were not reflected in these earnings as the deal has not closed yet.
The company said “continued softness in certain larger discretionary projects” were a factor in the sales decline but it also cited a “delayed start to spring,” a period when homeowners typically start to get active in home improvement projects. Depot’s performance – along with a similar if a bit smaller impact from Lowe’s, the number two player in the home improvement space – is often a leading indicator of the overall strength in the category. Its numbers held up throughout the earlier stages of the post-pandemic slowdown in the housing business but this now marks the sixth consecutive quarter same-store sales have declined. (Lowe’s was scheduled to release its results mid-week this week.)
For Depot, even as it steps up its efforts to go after the contractor business, it remains the homeowner which is the key to its return to revenue increases. “Our customers tell us,” CFO Richard McPhail told analysts, “Hey, we’re just going to wait and so that’s really the most important dynamic from an income perspective.”
