Home Depot cuts outlook as 3Q revenue misses forecast
NEW YORK (AP) — Home Depot reported a shortfall in third-quarter revenue as the retailer’s strategy to meld its online business and its physical stores is taking longer to deliver benefits.
The nation’s largest home improvement chain also faces increasing competition from Lowe’s, which is undergoing an overhaul under its new CEO.
Shares dropped more than 5%, or $12.64, to $226.21 in morning trading Tuesday.
“The competitive environment is tightening and while the economy remains robust, growth is moderating slightly,” said Neil Saunders, managing director of GlobalData Retail. ”Ultimately both things are weighing down on Home Depot’s growth prospects.”
Lowe’s Cos. is slated to report its third-quarter results Wednesday.
Home Depot is aiming to increase the speed of delivery by building hubs in smaller communities around the U.S. where it’s able to haul large trucks and deliver to customers. It’s also been installing lockers at the front of the store, allowing online shoppers to order before their store visit and pick up their items. Home Depot said 1,300 stores have lockers and it’s been very pleased with the customer response.
For the three months ended Nov. 3, Home Depot Inc. earned $2.77 billion, or 2.53 per share. A year earlier, the Atlanta-based company earned $2.87 billion, or $2.51 per share.
The profit figure met the expectations of analysts surveyed by Zacks Investment Research.
Revenue, however, totaled $27.22 billion, below the $27.47 billion that Wall Street was looking for.
Comparable sales rose 3.6%, whereas analysts polled by FactSet had predicted a 4.7% increase. The metric measures sales in stores open at least a year, a key indicator of a retailer’s health.
Home Depot said it now anticipates fiscal 2019 sales will grow by approximately 1.8% and comparable sales will climb about 3.5%. Its previous guidance was for sales growth of 2.3% and comparable sales growth of 4%.
Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio
Portions of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on HD at https://www.zacks.com/ap/HD