Home Depot cuts outlook as quarterly numbers disappoint

(Sharecast News) - American DIY chain Home Depot cut its full-year outlook on Tuesday, after weak consumer sentiment and a sluggish housing market weighed heavily on quarterly earnings. Net sales rose 2.8% at the big box retailer in the three months to 2 November, to $41.35bn, while like-for-like sales rose just 0.2%, well below forecasts for a 1.4% improvement. Net earnings softened 1.3% to $3.6bn.

Home Depot usually enjoys a fillip around the third quarter, as homeowners stock up on roofing materials, generators and other supplies in response the US's storm season.

However, Ted Decker, chief executive, said: "Our results missed expectations primarily due to the lack of storms in the third quarter.

"Additionally, while underlying demand in the business remained relatively stable sequentially, an expected increase in demand in the third quarter did not materialise.

"We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand."

Looking to the full year, Home Depot now expects comparable sales to be "slightly positive" year-on-year. That is down on the 1% growth previously forecast.

Forecasts for adjusted diluted earnings were also downgraded. EPS is now expected to fall by around 5%, a steeper decline than the 2% previously guided.

As at 1215 GMT, shares in the retailer - the world's largest home improvement chain - were down 4% in pre-market trading.