Home Depot Cuts Sales Forecast Amid Consumer Caution

Home improvement giant Home Depot reported stronger-than-expected quarterly earnings Tuesday, but issued a cautious outlook for the rest of the year. The company cited a growing sense of uncertainty among consumers as the primary factor driving the downward revision to its sales forecast.

Despite beating analysts’ estimates for the quarter, Home Depot now expects comparable sales to decline 3%-4% for the full year, a steeper decline than its previous estimate of a 1% decline. While the company’s recent acquisition of SRS Distribution is expected to boost overall revenue, it won’t be enough to offset expected weakness in core operations.

The retailer attributed the slowdown in sales to a combination of factors, including high interest rates and broader economic uncertainty. Consumers are increasingly hesitant to undertake major home improvement projects due to higher borrowing costs and concerns about the overall economic climate.

Home Depot’s customer base, traditionally more resilient than the broader consumer market, has also shown signs of strain. While the company’s customer demographics tend to be more affluent and homeowners are more likely to have substantial home equity, the current economic environment has led to a decline in both store traffic and average spending.

As the economic outlook remains muddled, Home Depot joins a growing list of retailers facing challenges in the face of consumer caution. The company’s performance will be closely watched as a barometer of broader economic trends.