Home Depot Inc.'s lackluster results last quarter are adding to concerns the U.S. housing market is slackening. The company blamed cool weather at the start of spring, its biggest selling season.
Revenue and comparable-store sales at the world's largest home-improvement retailer missed analysts' estimates, although profit beat projections for the 16th-straight quarter.
Home Depot's fortunes are so tightly intertwined with the housing market that they are often viewed as a proxy for the sector. The rationale is simple: If Americans feel like their properties are rising in value, they'll spend more fixing them up.
But prices have been sagging in some parts of the U.S. and mortgage rates have risen. Labor shortages have also slowed the building of new homes. While that can maintain demand for existing ones, it often limits the number of first-time homebuyers.
Home Depot shares fell as much as 3.4% to $184.58 in premarket trading. They had climbed 22% in the past year through Monday's close.
The retailer's quarterly results come amid mixed signals from U.S. housing data. Pending home sales rose less than expected in March. Meanwhile, new home purchases hit a four-month high during the same period.
The company said that besides outdoor goods, its business last quarter was solid across other categories. And sales have been “strong” so far this month as temperatures warmed up, according to Chief Executive Officer Craig Menear.
As a sign of confidence that nothing had fundamentally changed its outlook for the health of the housing market, the company reiterated its previous forecast for annual revenue of about $107.5 billion and profit of $9.31 a share.
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