Home Depot has today forecast full-year results below analysts' estimates, signaling that lackluster demand would continue to affect the company this year as people tighten spending on home remodeling amid sticky inflation.
The company's shares fell more than 2.3% to $354 in premarket trading.
With food prices and borrowing costs still elevated, customers are limiting home-related spend to just modest repair and maintenance work rather than undertaking larger renovations.
Home improvement companies are seeing stable demand for key items such as plumbing and hardware, while more discretionary categories such as flooring, kitchen and furniture have lagged.
Foot traffic at Home Depot ticked down in the fourth quarter, with declines worsening toward the end of the reporting period.
November saw store visits dip 1.6%, followed by a 5.5% drop in December and a 7.1% fall in January, according to data firm Placer.ai.
Despite being hopeful for a recovery in home-improvement spending in the second half of the year, analysts believe Home Depot will remain under pressure in the near-term.
Transactions at the retailer fell 1.7% in the fourth quarter, logging their eleventh quarterly decline in a row.
Home Depot forecast comparable sales to decline about 1% for fiscal 2024, while analysts were expecting an increase of 0.06%, according to LSEG data.
The company forecast earnings per share to grow by about 1% for fiscal 2024, while analysts were expecting a 3.62% rise to $15.61, according to LSEG data.
Home Depot's comparable sales fell 3.5% in the fourth quarter, compared to estimates of a 3.3% drop.
Still, a tighter lid on costs and easing supply chain expenses helped Home Depot post a per-share profit of $2.82 in the quarter, compared to estimates of $2.77.
