Home Depot Inc (NYSE:HD) stock fell 0.75% (As on May 10, 11:30:27 AM UTC-4, Source: Google Finance) after the company reported first-quarter comparable sales that missed the average analyst estimate. The quarter was impacted by a delayed start to spring and continued softness in certain larger discretionary projects. Comparable sales declined by 2.8% year-over-year, more than the 2.19% decline predicted by analysts. Meanwhile, U.S. comparable sales fell 3.2%, versus the estimated 2.35% drop. In March, Home Depot entered a definitive agreement to acquire SRS Distribution Inc., a fast-growing residential specialty trade distribution company servicing several verticals such as professional roofer, landscaper and pool contractors. Since the acquisition has not closed, the guidance does not reflect any impacts from the SRS acquisition.
HD in the first quarter of FY 24 has reported the adjusted earnings per share of $3.63, beating the analysts’ estimates for the adjusted earnings per share of $3.60. The company had reported the adjusted revenue growth to $36.42 billion in the first quarter of FY 24, missing the analysts’ estimates for revenue of $36.66 billion.
The company expects total sales growth of approximately 1.0%, including the 53rd week, which is projected to add approximately $2.3 billion to total sales. Comparable sales are expected to decline by approximately 1.0% for the 52-week period. For fiscal 2024, the company plans to open Approximately 12 new stores, gross margin is anticipated to be of approximately 33.9%, operating margin is expected to be of approximately 14.1% and 53-week diluted earnings-per-share-percent growth to be of approximately 1.0%. Looking ahead, Home Depot remains committed to its long-term growth strategy, focusing on enhancing its digital platforms and expanding its professional customer base. The company’s strategic focus is on enhancing customer experience and investing in its supply chain as key factors in navigating the current market dynamics. The company is developing more fulfillment options, a dedicated sales force, specific digital assets, trade credit and order management capabilities geared at the residential pro to shops across categories.
Meanwhile, the construction industry itself relies heavily on commercial distribution, with about 85% of construction products being sold through this channel and the remaining 15% coming from retail sales, like Home Depot. That’s why the company is trying to penetrate further into the Pro space and win a greater slice of the remaining 85% pie.