Home Depot shattered its 24-month same-store sales decline in Q4 2023, reporting $39.7 billion in revenue as the housing market showed tentative signs of recovery. The 0.8% uptick in comparable store sales – including a 1.3% jump in U.S. locations – marks a crucial turnaround after eight consecutive quarters of contraction, outperforming Wall Street’s projected 1.5% drop.
The Atlanta-based retailer benefited from a 7.6% spike in customer transactions, with average spending per ticket rising marginally to $89.11. While an extra week in the fiscal quarter contributed $2.5 billion to overall sales, executives emphasized organic growth in core home improvement categories.
This rebound suggests we're finally seeing the home improvement sector bottom out,said GlobalData’s Neil Saunders. Home Depot’s ability to capitalize on smaller projects while larger renovations stall is pivotal.
Key factors driving the resurgence:
- Modest uptick in existing home sales despite 6.7% mortgage rates
- 19 consecutive months of rising home prices (median: $396,900)
- Strategic inventory adjustments for DIY customers
Despite the positive momentum, Home Depot forecasts a 2% EPS dip in 2024 alongside 2.8% sales growth. Shares fell 2% pre-market as investors weighed mixed signals about consumer spending durability.
CEO Ted Decker acknowledged persistent challenges: We’re navigating a complex environment where homeowners prioritize essential repairs over major remodels.This strategic shift comes as 30-year fixed mortgage rates hover near 6.7%, suppressing housing turnover and large-scale renovation demand.
The National Association of Realtors reports existing home sales hit a 30-year low in 2023, with January 2024 transactions dropping 4.9% monthly. Analysts suggest Home Depot’s focus on professional contractors and supply chain efficiencies helped offset broader market weakness.
