Home Depot profits beat Street; lowers outlook on lumber deflation, tariff concerns
The Home Depot reported mixed results for its second quarter as earnings beat analysts’ estimates but sales fell short. The retailer also lowered its sales outlook for the year amid declining lumber prices and fears that tariffs will cut into consumer spending.
Net income fell to $3.48 billion, or $3.17 a share, compared with $3.51 billion, or $3.05 a share, in the year-ago period. Analysts had expected earnings per share of $3.08.
Sales inched up 1.2% to $30.84 billion, missing estimates of $30.99 billion. Total same-store sales rose 3%. Same-store sales in the U.S. were up 3.1%, missing expectations.
Home Depot has previously has estimated that the currently proposed 10% tariffs, set to take effect Sept. 1 and Dec. 15 — along with the 25% tariffs already in place — could raise its cost of sales by about $2 billion, or about 2% of annual sales.
“We are encouraged by the momentum we are seeing from our strategic investments and believe that the current health of the U.S. consumer and a stable housing environment continue to support our business,” said Craig Menear, chairman, CEO and president of The Home Depot. “That being said, lumber prices have declined significantly compared to last year, which impacts our sales growth. As a result, today we are updating our sales guidance to account primarily for continued lumber price deflation, as well as potential impacts to the U.S. consumer arising from recently announced tariffs.”
The company said it expects its fiscal 2019 sales to grow by approximately 2.3% and comp sales for the comparable 52-week period to be up approximately 4.0%. Previously, it said it expected total sales growth of 3.3% and same-store sales growth of 5%.
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