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The decline in the company’s same-store sales is attributed to customer’s reduced interest in do-it-yourself undertakings.
Home Depot Inc (NYSE: HD), one of the largest home improvement retailers in the US, is witnessing a significant decrease in stock prices during the fiscal second quarter. While the company’s quarterly profits have battered the Wall Street estimates, the shares toppled down by 4%.
The Georgia-based company reported an adjusted profit of $4.53 a share, exceeding estimates of $4.43 a share. The expected revenue for the fiscal second year was prescribed at $40.73 Bn, whereas the actual revenue collected was approximately $41.12 Bn.
The decline in the company’s same-store sales is attributed to customer’s reduced interest in do-it-yourself undertakings. Same-store sales for the US outlets were up by only 3.4% in the latest quarter, in comparison to a whopping figure of 25% a year earlier.
Home Depot’s Chief Executive Officer Craig Menear acknowledged the contribution of the company’s associates who helped serve their customers. In the recent earnings release, he appreciated their efforts because of which the company was able to hit the $40 Bn mark for the first time in quarterly sales.
While the total same-store sales rose to 4.5%, the company claimed a 5.8% drop in trade as compared to the last year. On the brighter side, the average ticket was 11.3% larger and the sales per retail square foot rose by 5.3% year over year to $663.05. The gradual increase in sales can however be attributed to inflation. According to several reports by analysts, the lumber prices saw a steep rise in the latest quarter.
While the Covid scenario boosted the sales for the firm, the subsequent opening up of the economy has led to a decline in the number of people interested in improving their houses. The recent dip in the sales is probably due to similar reasons, says Oppenheimer’s Wall Street analyst Brian Nagel.
Wall Street Analyst at Wells Fargo Zachary Fadem said that while the second-quarter same-store sales have stumbled, he is still hopeful that the company’s annual profits will be way higher than the previous year.
Home Depot banks upon the significance of housing markets, with rising costs and inexpensive mortgage value, to bring about massive sales for the firm. With covid cases rising again, analysts are predicting yet again a change in consumer behavior. Last year, the company’s brick and mortar stores were said to remain open while the pandemic took a tougher turn. In comparison to the previous year, the revenue growth for Home Depot is estimated to reduce by the end of this year.