Home Depot breaks two-year sales slump in Q4

Home Depot broke a two-year slump in same store sales during the fourth quarter as customer demand improved in a housing market that has been buffeted by soaring mortgage rates and a scarcity of homes up for sale.

Revenue for the Atlanta company climbed to $39.7 billion from $34.79 billion. Analysts polled by FactSet were calling for $39.15 billion.

Home Depot Inc. said Tuesday that the extra week in the quarter added approximately $2.5 billion in sales for the period.

Sales at stores open at least a year, a key indicator of a retailer’s health, edged up 0.8%. In the U.S., comparable store sales rose 1.3%. It is the first quarterly increase since January 2023 and much better than the 1.5% decline expected on Wall Street.

The extra week in the quarter was not included in the same-store sales results.

“The fact that US comparable sales are back in the black after declining for eight quarters or two years is a very clear win for Home Depot, and it suggests that the home improvement market as a whole might finally be reaching the nadir of its more sluggish performance,” Neil Saunders, managing director of GlobalData, wrote Tuesday.

However, Home Depot said Tuesday that it expects per-share earnings to decline about 2% this year on sales growth of approximately 2.8%.

Shares slipped about 2% before the opening bell.

Customer transactions rose 7.6% in the quarter. The amount shoppers spent climbed slightly to $89.11 per average ticket from $88.87 in the prior-year period.

“Our fourth quarter results exceeded our expectations as we saw greater engagement in home improvement spend, despite ongoing pressure on large remodeling projects,” said Chair and CEO Ted Decker said in a statement. “Throughout the year, we remained steadfast in our investments across our strategic initiatives to position ourselves for continued success, despite uncertain macroeconomic conditions and a higher interest rate environment that impacted home improvement demand.”

Home improvement retailers like Home Depot have contended with homeowners putting off bigger projects due to higher borrowing costs and lingering concerns about inflation.

The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes fell last month as rising mortgage rates and prices put off many would-be homebuyers despite a wider selection of properties on the market.

Sales fell 4.9% in January from December to a seasonally adjusted annual rate of 4.08 million units, the National Association of Realtors said last week. Home prices increased on an annual basis for the 19th consecutive month. The national median sales price rose 4.8% in January from a year earlier to $396,900.

Sales of previously occupied U.S. homes fell last year to their lowest level in nearly 30 years.

Home Depot earned $3 billion, or $3.02 per share, for the three months ended February 2. A year earlier it earned $2.8 billion, or $2.82 per share.

Removing certain items, earnings were $3.13 per share. That’s better than the $3.04 per share that Wall Street anticipated.

—Michelle Chapman, AP Business Writer

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