Home Depot releases Q2 financial report: revenue declined, but profit exceeded expectations!

It is learned that according to foreign media reports, on Tuesday (August 15), US home furnishing retail giant Home Depot reported that its profits in the second quarter of 2023 exceeded expectations, but sales declined as consumers reduced large purchases.

According to the financial report, Home Depot's net sales in the second quarter were US$42.92 billion, down 2% year-on-year, but better than analysts' expectations of US$42.23 billion; net profit was US$4.66 billion (or US$4.65 per share), down from US$5.17 billion (or US$5.055 per share) in the same period last year.

This is the first time in three quarters that the company has exceeded Wall Street's revenue expectations. However, Home Depot maintained its forecast for fiscal 2024. The company said that despite the better-than-expected performance, it still expects comparable sales to fall 2% to 5% compared with the same period last year. Compared with 2022, the full-year earnings per share growth rate is between -7% and -13%.

Home Depot Chief Financial Officer Richard McPhail said consumers continue to be cautious when it comes to large, discretionary purchases. He said: "On the one hand, homeowners have already made these large purchases during the pandemic. On the other hand, they are likely to postpone purchases due to higher interest rates. In addition, the era of supply chain disruptions has passed, which is better than the decline in transportation costs."

The report said that after nearly three years of unusually high demand, Home Depot faces tougher challenges as the U.S. home improvement boom fades. The company's chief financial officer McPhail told investors earlier this year that 2023 will be a year of slower sales as customers return to pre-epidemic purchasing behavior.

In addition to a cooling market, Home Depot is facing a weak housing market, inflation and a shift by consumers to spend more on services rather than goods.

It’s worth noting that Home Depot’s typical customer was in good financial shape in the second quarter, thanks to a surge in home equity during the pandemic. They’re still hiring contractors, but more for smaller projects.

Cooling inflation is also showing up in Home Depot's sales trends. The company isn't seeing deflation yet, but it's in a period of "price stability," according to McPhail. Home Depot has lowered retail prices in some cases, he said, and the price cuts aren't concentrated in any particular category.

In the second quarter of this year, the average amount spent by Home Depot customers on a single shopping trip was $90.07, which was the same as the same period last year, but the overall transaction amount decreased by 1.8%. In addition, the number of transactions of more than $1,000 decreased by 5.5%.

Chief Executive Officer Ted Decker said on an earnings call that sales to home professionals were higher than sales to DIY customers, but both were down from a year ago. He also said the number of jobs for professionals that were in high demand last year during the pandemic was down but still above historical levels.

Home Depot also said in its earnings report that its board of directors approved a $15 billion stock repurchase plan, which will take effect on Tuesday. As of Monday's close, Home Depot's stock price has risen 4% so far this year, according to reports.

Editor ✎ Nicole/

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