The Home Depot’s third-quarter sales and net earnings declined which, according to an analyst, reflects a deterioration in home moving activity.
The home improvement retailer’s net sales fell 3 per cent year over year to $37.71 billion while net income slid 12.2 per cent to $3.81 billion.
“During the company’s third quarter, existing home sales in the US fell by 15.8 per cent over the prior year. As moving home is a major driver of DIY spending, this step down has taken a significant amount of demand out of the market and will continue to act as a drag on sales for as long as the slump persists,” said Neil Saunders, MD at GlobalData.
“Among those who are not moving, there continues to be a pullback on larger projects, including major remodels and big construction. A lack of financing, softer confidence – and higher interest rates which impact borrowing to fund such activity – are all underpinning the decline.”
Saunders noted that the housing market situation is unlikely to change any time soon but Home Depot’s position in the professional market continues to be strong.
Saunders explained that there is a backlog of work in certain trades like electricals and small-scale construction, which creates demand for The Home Depot products and that the company remains a go-to shop for products needed for essential work such as plumbing and critical repairs.
Meanwhile, The Home Depot chair, president, and CEO Ted Decker said that the third-quarter performance is in line with the company’s expectations.
“Similar to the second quarter, we saw continued customer engagement with smaller projects, and experienced pressure in certain big-ticket, discretionary categories,” said Decker.
“We remain very excited about our strategic initiatives and are committed to investing in the business to deliver the best interconnected shopping experience, capture wallet share with the pro, and grow our store footprint.”
For the first three quarters, The Home Depot’s net sales slid 3 per cent to $117.88 billion while net earnings fell 10.2 per cent to $12.34 billion.
