Both improving weather conditions created upticks in demand, the Home Depot CEO said
Home Depot (NYSE:HD) stock moved moderately higher Tuesday morning as the market reacted to the home improvement products supplier’s third-quarter fiscal 2023 results.
Home Depot’s sales of $40.2 billion and adjusted EPS of $3.78 beat Wall Street’s consensus estimates of $39.3 billion and $3.65, respectively, while the company lifted its sales guidance for the full fiscal year.
It wasn’t an entirely rosy picture for Home Depot as the company saw year-on-year declines in comparable-store sales and adjusted EPS, two important bottom-line metrics for U.S. retail store chains.
Nevertheless, the retail giant’s expectation-beating results suggest that demand for home improvement projects hasn’t collapsed despite elevated interest rates and housing market uncertainty in 2024.
Home Depot helped by good and bad weather
Assessing Home Depot’s financial results, CEO Ted Decker pointed to both improving weather conditions and hurricanes as financial tailwinds during fiscal 2024’s third quarter.
“As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects as well as incremental sales related to hurricane demand.”
Decker went on to acknowledge that “macroeconomic uncertainty remains” but touted Home Depot’s quarterly performance as exceeding the company’s expectations. The firm’s Q3-FY2024 results also beat Wall Street’s forecasts, which may explain why HD stock rallied moderately early Tuesday.
There were still pain points in Home Depot’s data. Specifically, the company’s comparable-store sales declined 1.3%, and Home Depot’s adjusted EPS decreased from $3.85 in the year-earlier quarter to $3.78 in fiscal 2024’s third quarter.
On the other hand, Home Depot beat Wall Street’s adjusted EPS estimate of $3.65. The company also generated revenue of $40.2 billion, surpassing consensus forecasts of $39.3 billion.
In light of these and other results, GlobalData Managing Director Neil Saunders posited that Home Depot “may finally be reaching the bottom of its long sales slump and will soon pivot its core business back into growth”.
Upward-adjusted full-year guidance
Adding to Tuesday morning’s mildly bullish sentiment, Home Depot adjusted its guidance higher for the full fiscal year of 2024. However, even after the upward revisions, the firm continues to anticipate a challenging year.
In particular, Home Depot expects its fiscal 2024 sales to increase by approximately 4% year over year, versus the company’s prior guidance of 2.5% to 3.5% sales growth.
The firm sees its adjusted EPS falling 2% during that time frame, but that’s an improvement on its previous guidance for an adjusted EPS decline of 2% to 4%.
With this in mind, the company could still deliver full-year results above what was previously anticipated and feared.
