Home Depot Inc. (HDN), the largest home-improvement retailer in the U.S., has cut its annual sales forecast due to weak consumer demand resulting from the recent economic pandemic. The company cited weather, softening demand, and other factors as reasons for this decision. Shares of Home Depot tumbled nearly 5% in premarket trading following the announcement.
"Our sales for the quarter were below our expectations primarily driven by lumber deflation and unfavorable weather," said CEO Ted Decker.
The first-quarter sales fell more steeply than expected due to lower lumber prices and weak demand in certain big-ticket home-improvement categories. Consequently, Home Depot lowered its sales and earnings guidance for fiscal 2023 with a reported decrease of 4.2% at $37.26 billion in total revenue.
Comparable store sales—a metric that excludes new stores' performance—declined by 4.5%, marking a steeper drop than analysts had anticipated; they projected only a 1.6% decline.
In response to these trends, Home Depot now expects overall yearly sales to experience between a 2% and a 5% decline compared to their earlier projection of remaining relatively flat throughout this period.
Additionally, management is guiding an operating margin target range between approximately14%.
This downward adjustment sends warning signals across investors who view housing development indicators as crucial drivers behind consumer spending; many will be closely monitoring how these changing conditions affect future retail performances within various sectors tied directly or indirectly with housing improvements or renovations activities.