Home Depot falls after pointing to weak consumer spending trends; Lowe’s also lower

The Home Depot (NYSE:HD) fell in early trading on Tuesday after reporting Q2 results ahead of consensus estimates, but setting full-year guidance below expectations.

Comparable sales decreased 3.6% during the quarter, vs. -2.4% consensus. Customer transactions were down 1.8% during the quarter to $451.0 million. The average ticket of customers was 1.3% lower to $88.90 for the quarter. Sales per retail square foot dropped 3.6% to $660.17. Comparable sales were down 3.6% in the U.S. vs. -2.6% consensus.

Home Depot (HD) reported an adjusted operating margin of 15.5% for the quarter. EPS of $4.67 for the quarter, in comparison to the consensus estimate of $4.55 and $4.68 a year ago.

CEO update: “The underlying long-term fundamentals supporting home improvement demand are strong… During the quarter, higher interest rates and greater macroeconomic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects.”

Looking ahead, Home Depot (HD) expects comparable sales to decline approximately 3.0% to 4.0% in FY24, compared to a prior outlook for a decline of about 1%. The home improvement retailer expects to open approximately 12 new stores. Gross margin of approximately 33.5% is anticipated for the fiscal year, and operating margin of 13.5% to 13.6% vs. 14.1% prior estimate.

Shares of Home Depot (HD) fell 3.69% in premarket action to $345.81. Rival Lowe’s (LOW) was down 2.22%.