Why Home Improvement Retailer Home Depot's Shares Are Shooting Higher Today

Home improvement retailer Home Depot Inc HD reported a Q3 FY23 sales decline of 3% year-on-year to $37.71 billion, beating the analyst consensus estimate of $35.66 billion.

Customer transactions for the quarter fell 2.4%. Comparable sales decreased 3.1%, and comparable sales in the U.S. dropped 3.5%.

Gross profit fell 3.7% Y/Y to $12.7 billion. The operating margin was 14.3%, and operating income for the quarter plunged 12.1% to $5.4 billion.

The operating expenses increased 3.6% Y/Y to $7.3 billion. EPS of $3.81 beat the analyst consensus of $3.58.

The average ticket in Q3 was $89.36, a 0.3% decrease, and sales per retail square foot declined 3.7% to $595.71.

The company held $2.1 billion in cash and equivalents as of October 29, 2023. Net cash provided by operating activities for nine months totaled $16.4 billion.

"Similar to the second quarter, we saw continued customer engagement with smaller projects, and experienced pressure in certain big-ticket, discretionary categories," said Chairman, President and CEO Ted Decker.

Also Read: Home Depot Likely To Report Lower Q3 Earnings; These Most Accurate Analysts Revise Forecasts Ahead Of Earnings Call

Outlook: Home Depot narrowed its FY23 sales and comparable sales forecast for a decline of 3% - 4% (previously decline of 2% - 5%) compared to FY22.

HD forecasts EPS-percent -decline of 9% - 11% (previously 7% - 13% decline). The company expects an FY23 operating margin of 14.2% - 14.1% (previous view 14.3% - 14.0%).

Price Action: HD shares traded higher by 6.12% at $305.70 on the last check Tuesday.