Home Depot releases Q2 fiscal 2024 results
On Aug. 13, the Home Depot announced its financial results for the second quarter of fiscal 2024, reporting sales of $43.2 billion, an increase of 0.6% from the second quarter of fiscal 2023. Total sales include $1.3 billion from the recent acquisition of SRS Distribution Inc. (SRS), which represents approximately six weeks of sales in the quarter. Comparable sales for the second quarter of fiscal 2024 decreased 3.3%, and comparable sales in the U.S. decreased 3.6%.
Operating income for the second quarter of fiscal 2024 was $6.5 billion and operating margin was 15.1%, compared with operating income of $6.6 billion and an operating margin of 15.4% for the second quarter of fiscal 2023.
“The underlying long-term fundamentals supporting home improvement demand are strong,” said Ted Decker, chair, president and CEO. “During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects. However, the team continued to navigate this unique environment while executing at a high level. I would like to thank our associates for their hard work and dedication to serving our customers and communities.”
Fiscal 2024 Guidance including SRS Distribution business:
- Total sales to increase between 2.5% and 3.5% including the 53rd week
- 53rd week projected to add approximately $2.3 billion to total sales
- SRS expected to contribute approximately $6.4 billion in incremental sales
- Comparable sales to decline between 3% and 4% for the 52-week period compared to fiscal 2023
- Comparable sales decline of 3% implies a consumer demand environment consistent with the first half of fiscal 2024
- While comparable sales for the company are not currently on the trajectory for the low end of the range, a 4% decline implies incremental pressure on consumer demand
- Approximately 12 new stores
- Gross margin of approximately 33.5%
“Home Depot kicked off retail earnings with organic sales results that fell short of Wall Street analyst expectations for the second consecutive quarter,” M Science analyst John Tomlinson wrote after the report, according to Investor’s Business Daily. The company’s expectation for a rebound in sales trends from Q1, partly due to a late spring start, never materialized in Q2, he said. M Science believes home improvement demand continues to be negatively impacted from high interest rates and housing prices, which caused home turnover to weaken further during the quarter.
Lowe’s, which reportedly has a larger DIY customer base than Home Depot, is reporting earnings on Aug. 20 before the market open.
