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© Reuters. Home Depot Reduces Sales Opportunities on Wood Price Prices and Deflation(Bloomberg) – Terms of Trade is a daily newsletter that unveils a world torn apart by trade wars. Register here.
Home Depot Inc (NYSE :). reduce its revenue forecast for softwood lumber deflation and fear that President Donald Trump's recently announced tariffs will hurt US consumption.
- Same-store sales – a key indicator of a retailer's performance – rose 3% in the second quarter, ahead of the average forecast of 3.2%, according to Consensus Metrix. The company now sees growth of 4% for the full year, down from the previous forecast of 5%.
Key ideas
- Since the recession for years, Home Depot has been riding the wave of rising home prices, as homeowners often spend more when they see their properties as more and more of an investment. However, the domestic home market has generally slowed in recent years, and the 20% drop in the cost of lumber over the last year is putting additional pressure on Home Depot prices.
- Tariffs remain a question mark for corporate clients, faced with rising costs of some products as the Trump administration prepares to impose more duties on imports from China.
- There is a shift of about two quarters for orders, which means that the slowdown in residential construction continues to hit companies like Home Depot, which are closely related to housing. Nevertheless, the company has maintained its earnings per share guidance for the year.
Market reaction
- Home Depot lost up to 0.5% of its pre-market sales on Tuesday before the announcement. The stock advanced 21% this year until Monday's close, outpacing gains in the S & P 500 Index.
Have more
- For more information on the results, click here.
- For the statement of the company, click here.
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