The Home Depot’s annual net profit declined amid lower sales, which one analyst attributes to consumers deprioritizing spending on home improvement.
The company’s net profit fell 11.5 per cent to $15.14 billion in the fiscal year ended January 28. Net sales slid 3 per cent to $152.67 billion.
“In part, this reset is part of a natural cycle in which consumers have deprioritized spending on the home following the artificially high demand created by stay-at-home and then the injection of stimulus into the economy,” said GlobalData MD Neil Saunders.
“One of the main issues continues to be a very sluggish housing market… This continues to suck a lot of demand out of the market as home movers are, traditionally, big spenders on improvement.”
Saunders said that despite forecasts of the US housing market to slightly recover this year, it is expected to remain soft by historic standards and will continue to weigh down Home Depot’s performance.
He described it as “a somber set of final quarter numbers” which caps a year in which Home Depot fell back following a period of very elevated activity during the pandemic and its aftermath.
For this fiscal year, Home Depot estimates total sales to increase 1 per cent and expects to open about 12 new stores.
“We remain excited about the future for home improvement and our ability to grow share in our large and fragmented market, which we estimate to be over $950 billion,” said Home Depot chair, president, and CEO Ted Decker.
