Home Depot raised its full-year outlook on Tuesday as favorable weather and heightened demand for seasonal goods and outdoor projects helped the company achieve third-quarter results that surpassed market expectations. The home-improvement retailer is now anticipating adjusted earnings to decrease approximately 1% in fiscal 2024, which is a smaller decline than previously projected, now estimated to be between 1% and 3%. Sales are forecasted to grow by roughly 4% for the ongoing fiscal year, an upgrade from the retailer's earlier guidance of a 2.5% to 3.5% increase.
Comparatively, sales are expected to decline about 2.5% for the full year, a less severe decrease than the previous estimate of a 3% to 4% decline. The consensus on Capital IQ projects that same-store sales will decrease around 2.8%. Wedbush Securities noted that, "There should be incremental sales from hurricane-related rebuilding efforts in the fourth quarter and beyond." However, the firm pointed out that a turnaround in core indoor home improvement categories is still needed to drive further improvement, especially in the Western region where housing indicators have shown strength. For the three-month period ending on October 27, adjusted EPS fell to $3.78 from $3.85 a year earlier, yet this figure exceeded the Street's expectation of $3.66.
Sales climbed 6.6% to $40.22 billion, surpassing analysts' estimate of $39.21 billion. Following this news, shares of Home Depot rose by 1.4% in premarket trading. Chief Executive Ted Decker stated in a release, "While macroeconomic uncertainty remains, our third quarter performance exceeded our expectations.
As weather normalized, we observed better engagement across seasonal goods and certain outdoor projects, along with incremental sales linked to hurricane demand." At the company level, comparable sales dipped by 1.3%, which was better than the 3.2% decrease anticipated by analysts. In the U.S., this metric decreased by 1.2%.
The total number of transactions dropped by 0.2%, landing at 399 million. Average ticket prices fell by 0.8%, settling at $88.65, while sales per retail square foot experienced a 2.1% retreat. Truist Securities commented, "Although the company benefitted from favorable warm weather for most of the quarter and additional storm-related sales, it's clear that the third quarter came in better than what we anticipated three months ago." Parts of the United States endured severe storm weather, including hurricanes that resulted in flooding and damage during the just-concluded quarter. Home Depot's operating margin was recorded at 13.5% for the quarter, a decline from 14.3% the previous year.
Total operating expenses rose to $8.01 billion from $7.33 billion during the same period last year..