Prime Highlights:
The company posted a 14% increase in revenue, reaching $39.7 billion, exceeding analysts’ forecast of $39.16 billion.
Comparable sales grew by 0.8% in the fourth quarter, ending an 8-quarter streak of declines, and outperforming the anticipated 1.7% drop.
Key Background:
Home Depot exceeded Wall Street’s fourth-quarter earnings projections, marking a return to positive comparable sales growth after eight consecutive quarters of declines. Despite the challenges posed by high interest rates and home prices, the home improvement giant posted a quarterly net income of $3.0 billion, or $3.02 per share, compared to $2.80 billion, or $2.82 per share, in the previous year. Revenue increased by 14% to $39.7 billion, surpassing analysts’ expectations of $39.16 billion.
For the full year ahead, Home Depot anticipates a 2.8% growth in total sales and a 1% increase in comparable sales. However, the company projects a slight 2% decline in adjusted earnings per share compared to the prior year. Despite the challenges, Chief Financial Officer Richard McPhail expressed optimism, noting that although the housing market remains affected by high mortgage rates, consumer demand for home improvement persists. Sales grew in half of Home Depot’s product categories and across 15 of its 19 U.S. regions.
Comparable sales saw a modest increase of 0.8% in the fourth quarter, reversing eight quarters of consecutive declines. This outcome exceeded analysts’ expectations of a 1.7% drop. The improvement was driven by increased customer visits and higher average ticket sales. Notably, regions impacted by hurricanes contributed 0.6% to the comparable sales growth.
Home Depot’s focus on strengthening its e-commerce platform also paid off, with online sales growing 9% in the quarter. The company has been expanding its digital capabilities, especially in faster delivery services for large items such as appliances and power tools. Additionally, the company’s professional-focused initiatives, including the acquisition of SRS Distribution, boosted sales in categories like roofing and drywall. Although Home Depot faces a challenging retail environment, its diversified strategies, including store expansions and digital investments, position the company for continued growth despite macroeconomic headwinds.
