[ad_1]
Home Depot Inc., the largest US retailer of residential products, feels overwork for two reasons: lumber prices have peaked and competitor Lowe's Cos. Inc. Improves Performance, Says Company and Analysts,
Home Depot
HIGH DEFINITION, + 4.40%
Lumber prices have fallen sharply since last year, which will weigh on sales, the company said.
"Lumber prices have dropped significantly from last year, which has had an impact on our sales growth," said Craig Menear, General Manager of The Home Depot, in a statement.
On the Chicago Mercantile Exchange, futures prices for lumber fell by nearly 50% from July of last year, to approximately 350 dollars per thousand square feet.
The residential products retailer has updated its forecasts to account for this deflation, "as well as the potential consequences for US consumers of recently announced rates." President Trump has imposed tariffs on imports from China of certain products sold by Home Depot.
Lily: What really helped Walmart clean up its revenues – the 'associates' of the robot
Home Depot is now expecting sales for fiscal 2019 to increase by 2.3% and same-store sales by 4%. The FactSet consensus forecasts sales of $ 111.09 billion, which indicates a 3.3% increase over last year. Same-store sales are expected to grow by 4%.
Moody's agrees that tariffs could be a problem, with margins shrinking if they are in place for an extended period or increase.
"While we expect a stable residential environment and consumer trends will continue, earnings growth across the industry may be under pressure," said Bill Fahey, vice president of Moody's. "However, we also consider Home Depot to be better positioned than most to mitigate the impact of rates given its breadth and broad and diversified product portfolio."
Neil Saunders, managing director of GlobalData Retail, also thinks Lowe's is weighing on Home Depot's results.
"Even though we believe that Lowe's still has a lot of work to do before starting to match Home Depot with authority, brand visibility, and convenience, it is gradually putting the company on the map." order in his business, which means that the competitive environment is getting stronger, "writes Saunders. .
See: Target will stand out from its grocery competition with Good & Gather, according to experts
For the second quarter, Home Depot reported a turnover of $ 30.84 billion, up 1.2% from $ 30.47 billion last year and also slightly down below FactSet's forecast for $ 31.0 billion.
Despite the shortfall, Home Depot shares are up 4.4% in trading on Tuesday.
"Although the second quarter results were weaker than expected and the reduction of the accounting expense for the 2019 financial year is disappointing, we believe that a strict cost control in the first half is auspicious for the realization of the second semester and considers the impressions of the day as a decisive event for an improvement of the configuration to come. year-to-year comparisons, timber cycle deflation, potential improvements to the housing class, etc. Wells Fargo analysts, led by Zachary Fadem, wrote.
Wells Fargo rates outperform Home Depot's shares.
Lowe's
LOW, + 2.97%
is expected to release its second quarter results on Wednesday.
Home Depot shares have gained 26.4% since the beginning of the year, while the S & P 500 index
SPX, -0.79%
gained 16.1% for the period.
[ad_2]
Source link