Home Depot's Q2 Performance: Revenue Dip, New Stock Buyback And More

Home improvement retailer Home Depot Inc HD reported a second-quarter FY23 sales decline of 2% year-on-year to $42.92 billion, beating the analyst consensus of $42.25 billion.

Customer transactions for the quarter fell by 1.8%. Comparable sales decreased by 2%, and comparable sales in the U.S. dropped by 2%.

Gross profit declined 2.3% Y/Y to $14.2 billion. The operating margin was 15.3%, and operating income for the quarter fell 8.6% to $6.6 billion. Operating expenses increased 4.1% Y/Y to $7.6 billion.

EPS of $4.65 beat the analyst consensus of $4.46. The average ticket in Q2 was $90.07, a 0.1% growth, and sales per retail square foot declined 2.3% to $684.65.

The company held $2.8 billion in cash and equivalents as of July 30, 2023. Operating cash flow for six months totaled $12.2 billion, up from $7.2 billion in the prior year’s quarter.

Buyback: The board of directors also authorized a new $15 billion share repurchase program effective August 15, 2023, replacing its previous authorization.

“While there was strength in categories associated with smaller projects, we did see continued pressure in certain big-ticket, discretionary categories. We remain very positive on the medium-to-long term outlook for home improvement and our ability to grow share in a large and fragmented market,” said chair, president, and CEO Ted Decker.

FY23 Outlook, Reaffirmed: Home Depot sees sales and comparable sales decline of 2% - 5% (representing sales of $149.533 billion-$154.255 billion) vs. the $152.28 billion estimate. 

It forecasts an EPS decline of 7% - 13% versus last year (representing $14.52-$15.52) compared to analyst consensus of $14.96. 

It anticipates an operating margin of 14.3% - 14%.

Price Action: HD shares are trading lower by 0.62% at $327.92 in premarket on the last check Tuesday.