Home Depot warns of cautious consumers

You might want Jerome Powell on speed dial before you go through with those kitchen renovations.

In its latest earnings report, The Home Depot said it expects sales to remain strained for the rest of the year as high interest rates continue to deter homeowners from major home improvements. Now, the retailer anticipates full-year comparable sales to dip 3%–4% from last fiscal year, rather than its previously forecast 1% drop.

“During the quarter, higher interest rates and greater macroeconomic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects,” Home Depot CEO Ted Decker said during the earnings call.

Comparable sales for the quarter dropped 3.3% across all business units, and 3.6% in the US specifically. That marked the seventh consecutive quarter of negative comparable sales at Home Depot, per CNBC.

The company posted sales of $43.2 billion, a beat from the $42.57 expected by analysts, per FactSet. Net earnings, meanwhile, fell to $4.6 billion, a dip from $4.7 billion in the year-ago period.

Home Depot CFO Richard McPhail told CNBC that the company has been dealing with consumers with a “deferral mindset” since mid-2023, but now, they’re increasingly cautious. “Pros tell us that, for the first time, their customers aren’t just deferring because of higher financing costs; they’re deferring because of a sense of greater uncertainty in the economy,” he said.

So, if you, like us, have been looking for a read on consumer sentiment right now, take Home Depot’s latest earnings report as a warning.