On a call with CNBC, Chief Financial Officer Richard McPhail said demand eased throughout the year as consumers returned to more regular spending patterns. He said falling prices of lumber and rising interest rates were affecting the business.
Home Depot now sees an opportunity to return to growth, McPhail said.
“Our market is returning to normal demand conditions,” he said. “We're not there yet, but the pressures we saw in 2023 are diminishing.”
Here's what the company is all about Notified for a period of three months Wall Street ended Jan. 28 lower than expected, according to a survey of analysts by LSEG, formerly Refinitiv:
- Earnings per share: $2.82 vs. $2.77 expected
- Revenue: $34.79 billion vs. $34.64 billion expected
Home Depot shares fell more than 3% in premarket trading.
Net income for the fiscal fourth quarter fell to $2.80 billion, or $2.82 per share, from $3.36 billion, or $3.30 per share, a year earlier.
Net sales That's down from $35.83 billion in the year-ago period.
Home Depot has faced a tough sales backdrop over the past year. The home improvement retailer is following more than two years of Americans spending more time and money painting and repairing their homes during the Covid-19 pandemic.
The company has seen a slowdown in consumer spending, particularly on big-ticket items, as some households put off discretionary purchases due to inflation, put off buying a new home due to high interest rates, or choose to spend on experiences over goods.
Throughout last year, McPhail and CEO Ted Decker described 2023 as a “moderate year” after large gains during the pandemic.
On Tuesday, McPhail said customers are still putting off big projects — especially large-scale projects that require credit — because of high borrowing costs.
Still, he said sales were fairly flat throughout the fourth quarter, except for a dip in January due to cold and wet weather. He said the temporary downturn does not factor into the company's outlook for next year.
Average ticket and customer transactions both declined in the fourth quarter compared to the prior-year period. The average ticket fell to $88.87 from $90.05 in the year-ago quarter, McPhail said, reflecting a more general pricing environment.
As of Friday's close, shares of Home Depot were up nearly 5% this year. That roughly matches the S&P 500's gains over the same period. Shares of the company closed Friday at $362.35, bringing Home Depot's market value to $360 billion.
This story is developing. Check back for updates.
