Home Depot tops expectations in the fourth quarter, but customers pull back on spending

Home Depot's fourth-quarter performance was muted by ongoing caution from American consumers in a weak housing market, but the home improvement retailer topped Wall Street expectations.

The Atlanta company earned $2.57 billion, or $2.58 per share, for the three months ended Feb. 1. Stripping out one-time charges or benefits, earnings were $2.72 per share, topping analyst projections for per-share earnings of $2.53, according to FactSet.

A year earlier it earned $3 billion, or $3.02 per share.

An extra week in fiscal 2024 added approximately 30 cents per share to the year-ago quarter.

Home Depot's stock rose more than 3% before the market opened on Tuesday.

Revenue totaled $38.2 billion, down from $39.7 billion a year earlier. The extra week in the prior-year period added about $2.5 billion of sales.

Wall Street was looking for revenue of $38.09 billion.

Chair and CEO Ted Decker said in a statement that Home Depot's quarterly results ''were largely in-line with our expectations, reflecting the lack of storm activity in the third quarter and ongoing consumer uncertainty and pressure in housing. Adjusting for storms, underlying demand was relatively stable throughout the year.''

Customer transactions dropped 1.6% in the quarter. The amount shoppers spent rose to $91.28 per average receipt from $89.11 a year earlier.

Home Depot and other retailers have seen customers cut back on their spending amid concerns about inflation and economic uncertainty. A frozen housing market has added to more tepid spending, particularly for Home Depot.

The U.S. housing market has been in a slump dating back to 2022, the year mortgage rates began climbing from historic lows that fueled a homebuying frenzy at the start of this decade. And consumer confidence declined sharply in January, hitting the lowest level since 2014 as Americans grow increasingly concerned about their financial prospects.

Neil Saunders, the managing director of GlobalData, said there has been a shift in the behavior of homeowners because of the housing market and the economy, with more people taking on smaller projects now.

That sent more homeowners to local hardware stores, which can easily fulfill orders for smaller projects.