RETAIL ALERT | Home Depot Releases Q4 and FY23 Earnings Report

Home Depot’s fourth-quarter results were largely within expectations and the company provided a somewhat muted outlook for its fiscal 2024. After seeing sales decline 3.0% in the recently completed fiscal year, Depot estimates a 1.0% increase in sales for fiscal 2024. However, this estimate includes $2.3 billion in sales attributed to a 53rd week. 

Overall, Home Depot believes there will be low single-digit negative comps industry-wide in 2024 and that its estimated 1% decline in same-store sales will outperform the market. 

Q4 by the numbers:

• Sales declined by 2.9% compared to the fourth quarter of fiscal 2022.
• Comp sales in the U.S. decreased 4.0%, the fifth consecutive quarter of negative comp sales. Monthly comps were -2.7% in November, +0.6% in December, and -9.1% in January as wintry weather gripped the nation.
• Transactions declined by 1.7% and the average ticket declined by 1.3%.
• Big ticket transactions ($1,000 or more) were down 6.9%.
  
  

Fiscal Year 2023 by the numbers:

• Sales and net earnings declined 3.0% and 11.5%, respectively.
• U.S. comp sales declined 3.5%.
• Transactions declined 2.7%, and the average ticket declined 0.3%.
• The company opened 13 stores in fiscal 2023 (8 in the U.S. and 5 in Mexico) and plans to open approximately 80 more in the next five years.

What they’re saying:

• The company said that home improvement is a $950 billion addressable market, and has previously said the pro segment was $475 billion, or half of the total. Depot’s $153 billion in sales would put them at 16% of total addressable dollars.
• The company feels that prices have largely settled and should remain at current levels for a while.
• CEO Ted Decker said that Millennials are one year away from being the biggest source of spend at Home Depot. 

What this means for you:

Home Depot sees FY24 as another year of moderation and will continue to focus on its strategic investments of creating the best interconnected experience, growing pro wallet share, and building new stores. Brands that demonstrate how their products provide value for the smaller projects that homeowners will continue to prioritize in 2024 will continue to win. Shipping performance will also be critical as Depot looks to further right-size inventory while also increasing on-shelf availability rates.

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