Home Depot sales fall short

Home Depot reported falling sales Tuesday as consumers pulled back from spending on big-ticket home improvement projects, a sign of a broader consumer softening.

After a pandemic-fueled home improvement boom drove significant sales growth, Home Depot reported a sales decline for the first time since 2009, in the wake of the 2008 housing crisis. Revenue declined 4.2% in the first quarter, according to the company.

Consumers are reducing spending and scaling down their home improvement projects, leading the company to revise forecasts lower for the rest of the year, Home Depot CEO Ted Decker said on an analyst call yesterday. EVP of merchandising Billy Bastek also said that consumers were “pulling back on big ticket and some discretionary type purchases.”

The home improvement company also saw bad weather, especially this spring in California, and a drop in lumber prices impacting sales in the last quarter.

“Given the negative impact to first quarter sales from lumber deflation and weather, further softening of demand relative to our expectations, and continued uncertainty regarding consumer demand, we are updating our guidance to reflect a range of potential outcomes,” Richard McPhail, EVP and CFO at Home Depot, said in a statement.

After forecasting flat sales earlier this year, the company now predicts sales will likely fall between 2% to 5% for the year.

Other retailers reporting this week and next week, including Lowe’s and Target, are also expected to show a decline in sales on the back of weakened consumer spending, while Walmart is expected to demonstrate a modest increase.—DA