7 months ago • 2 mins
What’s going on here?
Home Depot had a surprisingly good quarter, with sales and profit hammering home that success.
What does this mean?
After nearly three years of soaring demand, Home Depot braced itself for a more challenging 2023, anticipating a return to pre-pandemic norms. But while there were some signs of strain, the situation wasn’t as dire as many predicted. Sure, the financial pinch has made folks hesitant about major renovations, and the big-ticket items that go along with that – but they’re still keen on smaller home projects, segments where Home Depot continues to shine. And professional contractors and builders, too, are keeping the registers ringing as they tackle their project backlogs. So even though the DIY behemoth recorded a 2% dip in sales compared to the same quarter last year, it outperformed both sales and profit forecasts.
Why should I care?
Zooming in: Safe as houses.
Home Depot’s keeping its annual forecast pretty conservative, despite the beat. But when it comes to the long haul, it’s feeling bullish – pointing to the US housing shortage as a potential sales booster for years to come. In fact, the firm thinks it could be a decade before housing supply catches up with demand. And while the real estate market isn’t currently in the best shape, it could be on the up: recent data revealed that permits for housing construction surged to a twelve-month high in June. That uptick signals a wave of new homes in the pipeline – and as everyone knows, new homes make for plenty of trips to Home Depot.
The bigger picture: Living it large.
US consumers are really showing their resilience. Retail sales rose by 0.7% in July, easily beating expectations – and wages, which are finally outpacing inflation, probably helped. Combined with Home Depot’s beefy performance, this could be a sign of what to expect when Target and Walmart’s results are released later this week too.
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