Customer transactions decline, citing lower home improvement spending, but increasing revenue forecast for the year

Home Depot Inc (NYSE:HD) is trading lower after the home improvement retailer missed sales expectations for the second quarter of 2024.

HD reported second-quarter 2024 revenue growth of 0.6% year-over-year to $43.175 billion, narrowly missing the consensus estimate of $43.376 billion.

The company said total sales included $1.3 billion from the recent acquisition of SRS Distribution Inc. (SRS), representing approximately six weeks of sales within the quarter.

Customer transactions declined 1.8% in the quarter. Comparable sales declined 3.3%, and U.S. comparable sales declined 3.6%.

Gross profit increased 1.8% year-over-year to $14.416 billion, with a margin of 33.4%, an increase of 40 basis points year-over-year.

Operating margin was 15.1%, down 22 basis points year over year. Operating income for the quarter decreased 0.83% to $6.534 billion. Adjusted operating margin was 15.3%, down from 15.5% a year ago.

Operating expenses increased 4.1% year-over-year to $7.882 billion. Adjusted earnings per share were $4.67 (-0.2% year-over-year), beating the consensus of $4.50.

Average revenue in the second quarter was $88.90, a decrease of 1.3 percent. Revenue per square foot of retail space fell 3.6 percent to $660.17.

As of July 28, 2024, the company had $1.613 billion in cash and equivalents. It generated operating cash flow of $10.906 billion in six months, compared to $12.205 billion in the prior year.

At the end of the quarter, HD operated 2,340 retail stores and over 760 stores in the United States, Canada and Mexico.

“The underlying long-term fundamentals supporting demand for home improvement projects are strong. During the quarter, higher interest rates and greater macroeconomic uncertainty put pressure on consumer demand overall, resulting in lower spending on home improvement projects,” commented Ted Decker, Chairman, President and CEO.

Also read: Home Depot Q2 earnings preview: Will more home repairs and the housing market benefit stock prices? Analyst says ‘weather-related headwinds’ are playing out

Outlook 2024, updated: Home Depot raised its revenue forecast to $156.49 billion from $154.20 billion — $158.01 billion versus the consensus of $158.88 billion. The company expects comparable sales to decline 3% to 4% (previously about 1%).

HD expects adjusted earnings per share of $14.66 to $14.96 versus consensus of $15.14. The company expects gross margin of ~33.5% (previously 33.9%) and adjusted operating margin between 13.8% and 13.9%.

Price promotion: At last check on Tuesday, HD shares were trading 2.36% lower at $337.65 in premarket trading.

Photo via Shutterstock

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This article Home Depot Q2 earnings: Customer transactions decline, cites weaker home improvement spending, but raises full-year sales forecast originally appeared on Benzinga.com

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