Home Depot’s Earnings did not do much to build confidence in their investors this past quarter. The home improvement retailer warned that their end-of-year outlook has dropped…
And it’s all thanks to customers putting off their home reno projects.
How is the company handling this decline?
Home Depot’s Lackluster Earnings
In their most recent earnings call, Home Depot announced that while they did meet this quarter’s expectations…
THE RETAILER WILL MOST LIKELY SUFFER TOWARDS THE END OF THE YEAR.
Home Depot anticipates comparable sales to drop between 3-4% compared to last year. This makes the 7th quarter in a row where the company reported dropping comparable sales.
Additionally, the company’s net income decreased to $4.65 billion from $4.66 billion one year ago.
In an interview, CFO Richard McPhail said that the drop in Home Depot’s Earnings is due to a “deferral mindset” in consumers.
Essentially, customers are spending less at the retailer for several reasons.
The most glaring issue is that home buyers and sellers would rather wait for interest rates to be cut before borrowing money on major home renovation projects.
Not to mention…
Customers are growing increasingly price-conscious thanks to rampant inflation in every sector. Their logic is: “Why would I take out a loan now when I can wait until interest rates are cheaper?”
Customers visited the retailer less and spent less when they did shop there…
And it’s not just Home Depot noticing this hit in their earnings… Lowes reported similar behavior in their stores.
Looking At The Bright Side
Even tho Home Depot has been bleeding in their earnings…
The company’s executives have still pointed to a healthy long-term future.
With America’s aging homes and an interest rate cut on the horizon, the company hunkering down for shoppers to come back in waves.
Until then, the company plans to hold down the fort by turning a huge profit on Halloween decorations…
(Even taking advantage of the Summerween trend).
Only time will tell, however, if Home Depot and its earnings can be built back up…
Or if the company needs a new blueprint for their sales.
Be Great,
GCTV Staff
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