Home Depot Q1 earnings dip on back of weak sales in challenging environment

Home improvement retailer Home Depot reported marginally disappointing Q1 2024 financial results today.

Ted Decker, Home Depot chair, president and CEO, described the quarter as "impacted by a delayed start to spring and continued softness in certain larger discretionary projects"

Lower-than-expected sales, especially for US region

The company announced sales of $36.4 billion for the first quarter of fiscal 2024, a decrease of 2.3% from the first quarter of fiscal 2023. Comparable sales for the first quarter of fiscal 2024 decreased 2.8%, and comparable sales in the U.S. decreased 3.2%.

Profits down, costs up

Gross profits were down 1% year-on-year to $12.43 billion, versus the $12.55 billion reported during the same quarter last year.

At the same time, operating expenses rose 5%.

Earnings per share satisfies expectations

Meanwhile, net earnings for the first quarter of fiscal 2024 were $3.6 billion, or $3.63 per diluted share, compared with net earnings of $3.9 billion, or $3.82 per diluted share, in the same period of fiscal 2023.

This was in line with estimates, as analysts were largely expecting earnings per share to be around the $3.64 mark for the quarter.

This came to an earnings per share (EPS) of $3.63 per share for the quarter, 5% down year-on-year.

Outlook for 2024

The company reaffirmed a rather grim forecast for the rest of the 2024 FY, in spite of the year having 53 weeks instead of the usual 52. These included:

• Comparable sales to decline approximately 1.0% for the 52-week period
• Total sales growth of approximately 1.0%, including the 53rd week
• Gross margin of approximately 33.9%
• Operating margin of approximately 14.1%
• Tax rate of approximately 24.5%
• Net interest expense of approximately $1.8 billion
• 53-week diluted earnings-per-share-percent of approximately 1.0%