Home Depot reiterates annual forecasts, flags housing affordability woes

Passers-by walk near an entrance to a Home Depot home improvement store in Boston. (AP Photo/Steven Senne)

Home Depot on Tuesday maintained its annual forecasts for a second straight time, even as the top U.S. home improvement retailer warned of rising volatility over consumer spending and ongoing pressure from housing affordability.

Shares were last up marginally in choppy premarket trading after the company also beat first-quarter results on the back of steady demand with shoppers spending more per trip.

Sentiment about the housing market remains subdued as the war in Iran stokes inflation pressures that are ‌elevating everything from building material prices to buyers’ mortgage rates.

Home Depot posted quarterly sales of US$41.77 billion, compared with analysts’ estimates of US$41.52 billion, according to data compiled by LSEG.

The chain has been investing in in-store tools and digital capabilities among others to pull in professional (Pro) customers such as contractors and builders undertaking large projects, helping it weather a broader industry slowdown.

Home Depot, in November last year, launched an AI-powered tool designed to help Pro customers streamline complex project planning by keeping track of material lists and project cost estimates.

Quarterly visits to Home Depot stores were up 1.9 per cent during the first quarter from a year earlier, according to data firm Placer.ai.

Home Depot kicks off a big earnings week for consumer companies, with rival Lowe’s and big-box retailer Target set to report on Wednesday and retail bellwether Walmart on Thursday.

Home Depot continues to expect annual comparable sales to be in the range of flat to a rise of 2.0 per cent and adjusted profit growth of flat to a 4.0 per cent rise.

The company posted an adjusted profit of US$3.43 per share for the first quarter, beating estimates of US$3.41.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Sriraj Kalluvila)