Home Depot Sales Fall Short As Consumers 'Become Increasingly Cautious': Analyst (CORRECTED)

Editor’s note: This story has been updated to correct the spelling of the analyst firm Telsey Advisory Group.

Careful consumers have put the brakes on Home Depot Inc‘s HD revenue for the second quarter as they await the Federal Reserve‘s expected rate cut in mid-September while navigating a shaky economy, an analyst says.

The retail giant posted $43.1 billion in revenue for the three-month period, down 0.6% from a year ago and missing the Wall Street consensus of $43.3 billion.

“The soft sales reflect pressure from the tough home improvement and soft housing market trends, with higher interest rates and macroeconomic uncertainty,” Telsey Advisory Group analyst Joseph Feldman said in a note.

“Furthermore, CFO Richard McPhail spoke in a CNBC interview this morning about how the consumer has become increasingly cautious in the current environment, while also deferring projects with expected interest-rate cuts creating lower financing costs three to six months from now,” the analyst added.

Read Also: Home Depot Earnings Are Imminent; Here Are The Recent Forecast Changes From Wall Street’s Most Accurate Analysts

Telsey maintained a Market Perform rating and a $360 price target on Home Depot.

Home Depot realized $1.3 billion in revenue over six weeks during the quarter as a result of acquiring building products provider SRS Distribution Inc. earlier this year.

Customer transactions for the second quarter fell 1.8%. Same-store sales worldwide decreased 3.3%, while same-store sales in the U.S. dropped 3.6%.

Second-quarter gross profit rose 1.8% from the same period last year to $14.4 billion to post a gross margin of 33.4% that is up 40 basis points from a year ago.

Price Action: Home Depot rose 1.52% to $351.12 by Tuesday’s mid-afternoon trading, while exchange-traded funds that track the stock gave mixed reactions to Tuesday’s earnings report.

• IShares U.S. Consumer Focused ETF IEDI ticked up 0.23%
• Consumer Discretionary Select Sector SPDR Fund XLY gained 2.28%
• VanEck Retail ETF RTH slipped 0.18%
• ProShares Ultra Consumer Discretionary UCC slid 1.06%
• Fidelity MSCI Consumer Discretionary Index ETF FDIS rose 2.14%

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