Shares of home improvement giant Home Depot (NYSE:HD) fell 3.6% in pre-open trading Tuesday following a miss in the current quarter and lower guidance for the year.
Sales for the first quarter fell 4.2% to $37.3 billion, missing the Wall Street consensus of $38.6B. EPS fell to $3.82 per share from $4.09 per share last year and missed the consensus of $3.87.
"After a three-year period of unprecedented growth for our sector, during which we grew sales by over $47 billion, we expected that fiscal 2023 would be a year of moderation for the home improvement market. Our sales for the quarter were below our expectations primarily driven by lumber deflation and unfavorable weather, particularly in our Western division as extreme weather in California disproportionately impacted our results," said Ted Decker, chair, president and CEO.
"We also observed more broad-based pressure across the business compared to when we reported fourth quarter results a few months ago. Despite a more challenging environment, our associates maintained their relentless focus on our customers, and I would like to thank them and our many partners for their hard work and dedication. While the near-term environment is uncertain, we remain very positive on the medium-to-long term outlook for home improvement and our ability to grow share in a large and fragmented market," said Decker.
Looking ahead, Home Depot sees fiscal 2023 sales and comparable sales down between 2% and 5%. The company had seen sales flat for the year.
Meanwhile, they see a diluted earnings-per-share-percent-decline between 7% and 13% compared to fiscal 2022. The company had expected a diluted earnings-per-share-percent-decline to be in the mid-single digits.
"Given the negative impact to first quarter sales from lumber deflation and weather, further softening of demand relative to our expectations, and continued uncertainty regarding consumer demand, we are updating our guidance to reflect a range of potential outcomes," said Richard McPhail, executive vice president and chief financial officer.