Home Depot Inc. continues to face challenges with negative sales for the sixth consecutive quarter, as the retailer grapples with a sluggish housing market and decreased demand for high-value items.
Same-store sales, a key metric used by investors to gauge performance at stores open for at least a year, dropped by 2.8% in the company’s fiscal first quarter, surpassing analysts’ expectations for a decline.
CEO Ted Decker attributed the downturn to “continued softness in certain larger discretionary projects” and a delayed onset of spring, as stated in a Tuesday announcement.
The retailer’s sales have dwindled amid inflationary pressures and high interest rates, which have dampened housing demand. Additionally, consumers have postponed home renovations and improvements after a surge during the pandemic, opting instead to focus on essential purchases.
To counteract sluggish consumer demand, Home Depot has been intensifying efforts to attract more professional clientele. In March, the company announced plans to acquire SRS Distribution Inc., a roofing supplies seller, for approximately $18.25 billion.
This move positions Home Depot in direct competition with rival Lowe’s Cos. for dominance in the professional market segment. However, the company noted that its fiscal 2024 guidance excludes the impact of this acquisition since the deal has yet to be finalized.
Total sales, including contributions from new store openings, decreased by 2.3% to $36.4 billion. Same-store sales were particularly weak in the U.S., Home Depot’s primary market, where they declined by 3.2%.
The company also operates stores in Canada and Mexico. Diluted earnings per share for the quarter decreased by 5% year-on-year to $3.63.
Home Depot’s shares saw a slight increase in pre-market trading in New York. However, the stock has declined by 1.6% year-to-date as of Monday’s close, lagging behind the 9.5% gain of the S&P 500 Index.
