Home Depot expects smaller drop in annual sales as hurricane rebuild boosts quarter

By Savyata Mishra

(Reuters) -Home Depot forecast a smaller drop in annual same-store sales on Tuesday, benefiting from resilient demand from professional contractors, as well as a lift from hurricane-related spending in the current quarter.

Its shares rose about 1.4% in early trade as the top U.S. home improvement chain also posted better-than-expected quarterly results, signaling a rebound in demand amid expectations of a drop in mortgage rates.

"As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects as well as incremental sales related to hurricane demand," CEO Ted Decker said in a statement.

Parts of southeastern U.S., including Florida, were battered by hurricanes Helene and Milton at the end of September and early October, prompting shoppers to stock up on items such as generators, batteries, plywood and other building materials.

The third quarter saw $200 million bump in hurricane-related sales as comparable sales turned positive in October, company executives said on a post-earnings call.

Home Depot (NYSE:HD ) has battled choppy demand over the past two years, as sticky inflation and higher borrowing costs prompted customers to pause large-scale home remodels and focus on repair and maintenance activities around their existing homes.

While easing pressure on mortgage rates, the Federal Reserve's rate cuts are expected to reduce borrowing costs for home-owners looking to renovate their properties to put them up for sale, benefiting home improvement retailers.

"While the Fed's interest rate cuts should help boost demand, they aren't a magic bullet particularly if the Trump administration implements across-the-board tariffs that cause prices to spike," said Zak Stambor, analyst with Emarketer.

Home Depot has also doubled down on its investments to appeal to the "pro" customer, including its $18.25 billion deal for SRS in March.

The company posted a 1.3% decline in comparable sales, the smallest decline since the fourth quarter of 2022, compared with analysts' average estimate of a 3.25% drop, according to data compiled by LSEG.



It earned $3.67 per share, beating estimates of $3.64.

Comparable sales is expected to fall 2.5% for fiscal year 2024, compared with its prior range of a 3% to 4% drop.

Source: Investing.com