Home Depot cut its profit and sales expectations for the year as consumers postpone home improvement projects and growth in house values remains sluggish.
The world's largest home improvement retailer's quarterly profit fell below analysts' estimates for the three months ended Nov. 2 as Home Depot's forecast shrank for both adjusted earnings per share and comparable sales for fiscal 2025.
The chain reduced the number of stores it plans to open to 12 in fiscal 2025, down from 13. It already had 2,356 stores by the end of the third quarter, Home Depot said in its Tuesday earnings statement.
Home price growth is sluggish despite an improvement in mortgage rates compared to last year, as consumers delay purchases amid persistent inflation and sellers wait for more growth in house values.
It comes as the cost of a U.S. home rose 1.3% to a median $385,000 in the 12 months ended in October, according to Homes.com data.
Homeowners are also postponing major home improvement projects, said Ted Decker, Home Depot's CEO, president and chair, in the statement.
"We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand," Decker said.
Fewer storms
Decker also said fewer storms during this year's hurricane season led to lower sales of products needed for home repairs, while demand for backup power generators also fell.
Total revenue at Home Depot increased 2.8% to $41.4 billion. That figure includes a contribution of about $900 million from Home Depot's recent acquisition of building products distributor GMS.
Comparable sales in the quarter rose 0.2%, missing the consensus expectation of a 1.4% increase, according to Seeking Alpha.
Home Depot said net earnings in the third quarter fell 1.3% to $3.6 billion from the same time a year earlier.
Excluding one-time charges and benefits, Home Depot reported earnings of $3.74 per share, or 10 cents lower than the average estimate of analysts polled by FactSet, according to the Associated Press.
Shares of Atlanta-based Home Depot fell about 4.3% on Tuesday afternoon, compared to a 0.2% decline in the S&P 500 index.