Home Depot Cuts FY23 Outlook; Stock Down In Premarket - Update

(RTTNews) - Home improvement retailer Home Depot, Inc. (HD), while reporting weak first-quarter results on Tuesday, updated its earnings and sales forecast for fiscal 2023, expecting further decline.

In pre-market activity on the NYSE, Home Depot shares were losing around 4.5 percent to trade at $275.55.

For fiscal 2023, the company now projects earnings per share percent decline between 7 percent and 13 percent compared to fiscal 2022. Operating margin rate is now expected to be between 14.3 percent and 14.0 percent.

The company previously projected earnings-per-share-percent-decline to be mid-single digits and operating margin rate of approximately 14.5 percent.

Further, sales and comparable sales are now expected to decline between 2 percent and 5 percent compared to fiscal 2022. Previously, sales growth and comparable sales growth were expected to be approximately flat.

In fiscal 2022, net earnings were $17.1 billion or $16.69 per share, on sales of $157.4 billion, and comparable sales growth of 3.1 percent.

Richard McPhail, executive vice president and chief financial officer, said, "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."

In the first quarter, earnings decreased from the same period last year but beat the Street estimates.

The company's earnings totaled $3.87 billion, or $3.82 per share. This compares with $4.23 billion, or $4.09 per share, in last year's first quarter.

Analysts on average had expected the company to earn $3.80 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

The company's sales for the quarter fell 4.2 percent to $37.26 billion from $38.91 billion last year.

Sales were below expectations primarily driven by lumber deflation and unfavorable weather, particularly in Western division as extreme weather in California disproportionately impacted results.

Comparable sales for the first quarter decreased 4.5 percent, and comparable sales in the U.S. decreased 4.6 percent.

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