Tale of two pioneers: Home Depot and Walmart have different views on the future prospects

HIGHLIGHTS – Two major retailers making headlines this week have differing views on how the rest of the year might unfold for their consumers.

Both Walmart and Home Depot, seen by many as indicators of consumer spending, reported their second-quarter results this week, setting the tone for what will happen in retail during this unpredictable year.

In its second quarter fiscal 2025 earnings release, Walmart reported “strong growth in sales and operating income,” adding that “e-commerce penetration is higher globally across all segments.” In the earnings release, the company reports that it has raised its fiscal 2025 guidance. For the third quarter, net sales are expected to increase 3.25% to 4.25% and operating income 3% to 4.5% in constant currencies. For the year, net sales are expected to increase 3.75% to 4.75% and adjusted operating income 6.5% to 8% cc.

“Our team delivered another strong quarter,” said Doug McMillon, President and CEO. “They work hard every day to help our customers and members save time and money. Every part of our business is growing: store and club sales are increasing, e-commerce is growing as we increase pickup, and delivery is growing even faster as our speed increases. Our newer businesses like marketplace, advertising and membership are also contributing, diversifying our profits and building the resilience of our business model.”

In its earnings release, Home Depot reported revenue of $43.2 billion for the second quarter of fiscal 2024, up 0.6% from the second quarter of fiscal 2023. Total revenue includes $1.3 billion from the recent acquisition of SRS Distribution Inc. (SRS), representing approximately six weeks of revenue in the quarter. Comparable sales for the second quarter of fiscal 2024 decreased 3.3%, and U.S. comparable sales decreased 3.6%.

Home Depot updated its fiscal year 2024 guidance in the press release with the last 53 weeks of operating results to reflect performance in the first half of fiscal year 2024 and to include SRS:

Officials are forecasting a 3% to 4% decline in comparable sales for the 52-week period compared to fiscal 2023. A 3% decline in comparable sales implies a consumer demand environment consistent with the first half of fiscal 2024. And while the company’s comparable sales are not currently on track to reach the lower end of the range, a 4% decline represents increasing pressure on consumer demand

“The underlying long-term fundamentals supporting demand for home improvement projects are strong,” said Ted Decker, chairman, president and CEO of Home Depot. “During the quarter, higher interest rates and greater macroeconomic uncertainty put pressure on consumer demand overall, resulting in lower spending on home improvement projects. However, the team continued to navigate this unique environment while performing at a high level.”

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