Home Depot is grappling with a deep funk in the housing market, which is “disproportionately impacting home improvement demand” as homeowners delay projects and wait out economic uncertainty, its CEO Ted Decker said during the company’s third-quarter earnings call Tuesday.
The Atlanta-based retailer missed Wall Street expectations for the third consecutive quarter, posting net income of $3.6 billion, or $3.62 per share, compared with $3.65 billion, or $3.67 per share, a year earlier. While total revenue rose to $41.4 billion from $40.2 billion, the increase was largely attributable to approximately $900 million in sales from its recent acquisition of GMS Inc., a specialty building products distributor. Without that acquisition, total sales were essentially flat.
Comparable sales, a key metric tracking performance at stores open at least a year, increased just 0.2% in the quarter, with U.S. comparable sales edging up only 0.1%. Customer transactions fell 1.4%, though the average purchase amount rose to $90.39 from $88.65 in the prior-year period.
“While underlying demand in the business remained relatively stable sequentially, an expected increase in demand in the third quarter did not materialize,” CEO Ted Decker said. He explained that results missed expectations primarily due to a lack of storms in the third quarter, which reduced demand for roofing materials, backup power generators and plywood, as well as an anticipated increase in demand that never materialized.
