(Bloomberg) -- Home Depot Inc. narrowed its guidance for a decline in this year’s profit and revenue as home-improvement demand wanes.

Between 2020 and 2022, locked-down consumers flocked to Home Depot for tools and products to take on new renovation projects. But now, maintaining sales growth has proven to be challenging with mortgage rates near their highest level in two decades, a steep drop in home sales, and a broader shift toward spending on travel and entertainment. 

In August, the company said 2023 would be a year of moderation as consumers shift their spending to services. This fiscal year, analysts expect both Home Depot and competitor Lowe’s Cos. to report their first simultaneous declines in revenue growth since 2010.

While customers continue to spend on small projects, big-ticket purchases are under pressure, Chief Executive Officer Ted Decker said in a statement. Professional contractors’ project backlogs are down from a year ago, likely contributing to the weakness in sales of higher-priced items.

Same-store sales, a key measure of retailer performance, will probably drop 3% to 4% this year, the company said Tuesday, trimming one percentage point off each side of the range. Earnings per share should fall 9% to 11%, compared with a previous forecast of as much as 13%.

In the quarter ended Oct. 29, comparable sales fell 3.1%, slightly better than analysts’ expectation for a 3.3% drop. Earnings per share also came in slightly above forecasts, though were down from a year ago.

The shares jumped 5.9% as of 9:55 a.m. in New York following the better-than-feared third-quarter sales and earnings results.

Average ticket, the dollar amount spent per transaction, fell from a year ago, suggesting that inflation is no longer propping up Home Depot’s performance. A separate report Tuesday showed a broad slowing in US inflation, including a fifth-straight drop in prices for core goods, which excludes gasoline and food. 

The company didn’t offer guidance for 2024, but analysts Evercore noted after the report that “consensus estimates for 2024 are too high for Home Depot and most of our home-improvement-related names.”

That said, Home Depot’s offerings, including new product lines and good customer service, “are helping the company to take the edge of economic challenges and will hold it in good stead once the economic cycle picks back up,” Neil Saunders, managing director at GlobalData Plc, wrote in a note.

Home Depot is the first of the major US retailers to report earnings for the third quarter. Target Corp. and TJX Cos. will release results on Wednesday, followed by industry benchmark Walmart Inc. on Nov. 16. 

(Updates with details from call with analysts starting in fourth paragraph, shares in seventh paragraph, CPI data in eighth paragraph.)

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