Home Depot Cuts Sales Forecast--Update
20 Août 2019 - 9:00PM
Dow Jones News
By Kimberly Chin
Home Depot Inc. lowered its sales forecast and warned that
falling lumber prices -- as well as the potential effects of
tariffs on U.S. consumers -- could weigh on growth.
The home-improvement retailer said fiscal 2019 sales growth
would increase by 2.3%, down from its previous guidance of 3.3%.
Same-store sales are projected to grow by about 4%, a percentage
point lower than its previous forecast. The company affirmed its
earnings guidance, projecting per-share earnings growth of about
3.1%.
Lower lumber prices, crimping what Home Depot can charge
customers, have resulted in about $340 million in lost revenue from
a year ago, Chief Financial Officer Carol Tomé said on a call with
analysts Tuesday. Meanwhile, the volume of lumber has increased,
she said.
The price of lumber has been in a slump this year, pulled
downward by a flood of supply when prices peaked last year, as well
as a decline in home building due to bad weather in key
construction markets.
The company also said the potential role of tariffs factored
into its revised guidance. Chief Executive Craig Menear said in a
conference call that Home Depot has to weigh the uncertainty around
the tariffs and the potential "total impact on the customer."
Ted Decker, executive vice president of merchandising, said on
the analysts call that he and his team have been negotiating with
merchants and suppliers to limit the tariff effects.
The number of customer transactions was flat from a year ago
while average ticket prices rose 1.7%, and big-ticket transactions,
or the number of comparable transactions over $1,000, climbed 3.7%
from a year earlier. Meanwhile, the amount of money customers spent
per visit, rose 1.7%.
"The consumer is healthy today," Ms. Tomé said in an interview,
citing the number of customers and transactions Home Depot sees
in-stores and online.
She said consumer confidence is high, wages are up and
homeowners are spending right now.
Same-store sales -- a common metric in retail based on revenue
at stores open at least one year -- rose 3%. Analysts expected a
3.3% rise.
Overall sales for the Atlanta, Ga., company rose 1.2% to $30.84
billion from a year ago, slightly behind analysts' estimates of $31
billion, according to FactSet.
Home Depot said its second-quarter earnings fell to $3.48
billion, or $3.17 a share, but topped analysts' projections of
$3.09 a share.
Shares of Home Depot rose 4.5% to $217.28 and has gained 26% in
the year.
The company has made a number of investments to improve the
in-store experience, particularly in its loyalty program for
housing professionals, as well as enhancing its delivery, pick up
and e-commerce capabilities and expanding its merchandise offerings
to include such items as home décor and DIY projects. Expenses rose
1.3% in the quarter.
Write to Kimberly Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
August 20, 2019 14:45 ET (18:45 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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