Sales growth slows at Home Depot
Home Depot Inc. fell after sales growth slowed as the first quarter progressed, overshadowing a forecast increase and profit that beat analysts’ expectations.
Comparable-store sales rose 4.3 percent in April, down from 6.7 percent growth in March and a 10.2 percent gain in February, Chief Financial Officer Carol Tome said on the company’s first-quarter earnings conference call Tuesday.
That deceleration sparked fears that homeowners may be pulling back on renovations after years of rising housing prices fueled a remodeling boom. Yet Tome said the company continues to see “strength” in the U.S. housing market and that early data on second-quarter demand gave the chain confidence to increase its projections, she said.
After initially rising in early trading, the shares closed at down 2.5 percent to $131.96 in New York. Home Depot had gained 2.3 percent this year through Monday.
Profit last quarter rose to $1.44 a share, the Atlanta-based company said in a statement. Analysts estimated $1.35, on average. Sales climbed 9 percent to $22.8 billion, topping analysts’ $22.4 billion projection.
Home Depot said revenue may increase 6.3 percent year, up from a previous projection for growth of as much as 6 percent, which still would be slightly higher than its average growth rate of the past four years. Profit will be about $6.27. Home Depot had previously forecast earnings of $6.12 to $6.18, and analysts estimated $6.22.
Weather often affects Home Depot’s sales. The warm winter in much of the U.S. allowed homeowners to complete more outdoor projects in December, which boosted sales by $100 million in the fourth quarter.
Chief Executive Officer Craig Menear said in Tuesday’s statement that weather variability resulted in “week-to-week” demand spikes in the first quarter, and executives on the call put the total boost to first-quarter sales at $250 million, driven by a warm February.