A Home Depot store location, in Boston, on Jan. 27, 2020.Steven Senne/The Associated Press
Home Depot Inc. on Tuesday fell short of U.S. same-store sales estimates for the first time in nearly two years as pandemic-fuelled do-it-yourself projects tapered off, sending shares of the retailer down as much as 5.5 per cent.
Home-improvement chains had a blockbuster 2020 as revenue and profit surged from stuck-at-home Americans splurging on paint, tools and gardening equipment to upgrade their living spaces through DIY projects. A strong housing market and fresh government stimulus floated earlier this year also helped lift consumer demand. The steady rollout of COVID-19 vaccines, however, prompted more Americans to return to outdoor activities and abandon some pandemic-induced shopping habits.
U.S. same-store sales at Home Depot climbed 3.4 per cent in the second quarter – the smallest increase in two years, and missed analysts’ estimates of a 4.9-per-cent rise, according to IBES data from Refinitiv.
Underscoring the slowdown was data on Tuesday that showed a bigger-than-expected drop in July retail sales, partly reflecting the rotation of spending from goods to services such as travel and entertainment.
Home Depot chief financial officer Richard McPhail told Reuters that sales in the first two weeks of August were comparable with the second quarter, but any potential impact from the fast-spreading Delta coronavirus variant is still uncertain.
“We don’t see anything that we would point to and say that’s the impact of Delta, not yet,” he said, as the company did not provide a full-year outlook.
The slowdown in Home Depot’s sales also lowers expectations for smaller rival Lowe’s Cos. Inc. , which is even more dependent on DIY consumers than Home Depot, JPMorgan analysts said.
Lowe’s will report its quarterly numbers on Wednesday.
Home Depot’s quarterly second-quarter net sales rose 8.1 per cent to US$41.12-billion. The home-improvement retailer earned US$4.53 on a per-share basis, beating estimates of US$4.44 a share.
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