Home Depot Home Store Sales Disappoint, Warns of Fare Impact By Reuters

By Uday Sampath Kumar

(Reuters) – Home Depot Inc. (NYSE 🙂 on Tuesday accused the February rainy weather and falling lumber price of its weakest quarterly comparable store sales growth for at least three years, while cautioning new tariffs on Chinese imports.

Bad weather and shortages of land and labor have limited the ability of builders to build new homes, particularly in the low-price segment, creating an overabundance of supply for the market. woodwork, an essential building material.

Home Depot said weak lumber prices were weighing on the growth of its first-quarter sales of $ 200 million. If prices do not improve for the remainder of the year, this could result in a reduction in overall sales of an additional $ 600 million.

Woodworking futures prices have fallen 28.6% since their peaks of 2019 in early February. This product accounted for nearly 8% of Home Depot's sales in the past year.

Adverse weather conditions also led contractors to delay housing construction and prevent the company's independent customers from working outside, which had an additional impact on the demand for Home Depot products in February.

Same-store sales in the home improvement chain increased 2.5% in the quarter ended May 5, but did not anticipate an increase of 4.2%, according to Refinitiv's IBES data.

Nevertheless, Home Depot has slightly exceeded estimates of overall net sales as it offers services such as credit lines and equipment leases to larger and more frequent customers, such as electricians, homeowners and homeowners. plumbers and builders.

In a conference call with analysts, Edward Decker, Executive Vice President of Merchandising, said that Washington's latest tariffs on Chinese goods worth $ 200 billion would increase the annual cost of goods sold by companies. 39, about $ 1 billion.

The company said US tariffs adopted in 2018 already had an impact of $ 1 billion.

The impact, however, is manageable, says Decker, as it accounted for less than 1% of total annual sales. During the last fiscal year, the Company's net sales reached $ 108.2 billion.

"We have not settled yet what we would do if the cost increases came to us," Carol Tomé, the outgoing chief financial officer, told Reuters at the request of the company if the price of its products would increase.

"Sometimes, when costs increase, we pass them on retail prices, sometimes not."

The company's net profit reached $ 2.51 billion, or $ 2.27 per share, and surpassed the average analyst estimate of $ 2.18 per share.

Net sales rose 5.7% to $ 26.38 billion, exceeding expectations of $ 26.36 billion.