By Anuja Bharat Mistry
May 19 (Reuters) – Home Depot on Tuesday maintained its annual forecasts for a second straight time, even as the top U.S. home improvement retailer warned of rising volatility over consumer spending and ongoing pressure from housing affordability.
Shares were last down marginally in choppy premarket trading. The company also beat first-quarter results on the back of steady demand with shoppers spending more per trip.
U.S. consumer sentiment slumped to a record low in early May while the outlook for the housing market remained subdued, as the war in Iran stoked inflation pressures that are weighing on household finances and purchasing power.
Home Depot continues to expect annual comparable sales to be in the range of flat to a rise of 2.0% and adjusted profit growth of flat to a 4.0% rise.
“Guidance was reiterated, which to us isn’t overly surprising, but perhaps mildly positive in that the pressure associated with the continuation of the Iran war could have led to a downtick,” said Michael Baker, analyst at D.A. Davidson.
Home Depot kicks off a big earnings week for U.S. consumer companies, with rival Lowe’s and big-box retailer Target set to report on Wednesday and sector bellwether Walmart on Thursday.
PROFESSIONAL FOCUS PAYS OFF
Home Depot posted quarterly sales of $41.77 billion for the first quarter, compared with analysts’ estimates of $41.52 billion, according to data compiled by LSEG.
The chain has been investing in in-store tools and digital capabilities among others to pull in professional (Pro) customers such as contractors and builders undertaking large projects, helping it weather a broader industry slowdown.
Home Depot launched an AI-powered tool in November designed to help Pro customers streamline complex project planning by keeping track of material lists and project cost estimates.
Comparable average ticket, or spending per visit, rose 2.2% in the three months ended May 3, while comparable customer transactions dipped 1.3% from a year earlier.
The company posted an adjusted profit of $3.43 per share for the first quarter, beating estimates of $3.41.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Sriraj Kalluvila)
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