Home Depot Reaffirms Forecast as 1Q U.S. Comp Sales Miss Estimates
Home Depot Inc. (HD.N) failed to fully rebound from a lackluster end to last year with its spring selling season getting off to a rocky start.
-First quarter same-store sales -- a key gauge of a retailer’s success -- rose 2.5 per cent, trailing estimates of 4.3 per cent compiled by Consensus Metrix. First-quarter earnings per share rose to US$2.27, topping projections of US$2.18.
-Homeowners often spend more when home prices are rising because they view their properties increasingly as an investment. This trend has been in place since the recession, offering Home Depot a big boost, but there have been signs that the market is cooling off. On Tuesday, the company said the current housing backdrop led it to reaffirm its guidance for fiscal 2019.
-The spring is Home Depot’s most lucrative time of the year, a period that spans the end of the first quarter and the beginning of the second. The timing of it can vary depending on when winter breaks. The company said it was pleased with the underlying performance of its core business despite unfavorable weather in February.
-Like many long-standing national retailers, Home Depot has basically stopped adding stores and instead relies on making locations more productive while boosting online purchases. That makes same-store sales even more crucial for investors. The first quarter’s growth rate was the lowest since 2015.
-The first-quarter report comes after the company disappointed investors in February when it forecast same-store sales growth of 5% for this year, a tick under 2018’s gains. The company reiterated that on Tuesday.
-Home Depot rose as much as 0.9 per cent in premarket trading Tuesday. The stock had gained 11 per cent this year through Monday’s close.