Home Depot Warns That Housing Pressures Will Persist Next Year

Core Insights - Home Depot Inc. is providing cautious preliminary guidance for the upcoming year, indicating a lack of expectation for a short-term rebound in the housing market [1] - The company anticipates comparable sales growth to be flat to up 2%, which is below Bloomberg's average estimates [1] - Total sales growth projections are also below market estimates [1] Industry Context - The US housing market is negatively impacting Home Depot, as high interest rates are causing consumers to delay big-ticket purchases and projects requiring financing [3] - Although mortgage rates are lower than a year ago, consumers remain cautious due to higher overall costs and persistently high home prices, making housing less accessible for many [3] Future Outlook - The CFO of Home Depot stated that pressures on the housing market are expected to continue until a catalyst for increased housing activity is identified, with pent-up demand for projects building since 2023 [4] - Home Depot has outlined a "market recovery" scenario where comparable sales could rise by 4% to 5% if housing activity and spending increase [5] Company Strategy - The company is investing in employee development, store operations, and offerings for professional contractors, with plans to open 15 to 20 new stores annually in the near term [6] - Executives express optimism about Home Depot's long-term fundamentals due to the aging and shortage of homes in the US [6] Performance Comparison - Home Depot's latest earnings report indicated that an expected rebound in demand has not occurred, leading to a 10% decline in its shares this year, contrasting with a 16% gain for the S&P 500 Index [7] - The company's performance has diverged from other large retailers like Walmart Inc., which have maintained growth despite facing challenges in the US [7]