Home Depot (HD) Q1 Earnings Surpass, Sales Miss Estimates

Core Insights - Home Depot Inc. reported first-quarter fiscal 2024 results with earnings exceeding estimates but sales falling short, reflecting a year-over-year decline in both metrics [1][3] - The company's performance was affected by a delayed spring season and reduced demand for larger discretionary projects, although it maintained confidence in its business initiatives and market share expansion [1][2] Financial Performance - Earnings per share were $3.63, down 5% from $3.82 in the previous year, but above the Zacks Consensus Estimate of $3.61 [3] - Net sales decreased by 2.3% to $36,418 million from $37,257 million year-over-year, missing the Zacks Consensus Estimate of $36,654 million [3] - Comparable sales fell by 2.8%, with a 3.2% decline in the U.S. due to reduced customer transactions and average ticket sizes [3][4] - Gross profit decreased by 1% year-over-year to $12,433 million, while gross margin improved by 40 basis points to 34.1% [4] - Operating income fell by 8.5% to $5,079 million, with operating margin contracting by 100 basis points to 13.9% due to higher SG&A expenses [4] Operational Metrics - SG&A expenses rose by 4.9% to $6,667 million, increasing as a percentage of sales by 120 basis points to 18.3% [4] - Customer transactions declined by 1% year-over-year, and average ticket size decreased by 1.3% [3][4] Cash and Debt Position - At the end of the first quarter, Home Depot had cash and cash equivalents of $4,264 million and long-term debt of $42,060 million [5] - The company generated $5,497 million in net cash from operations during the first three months of fiscal 2024 [5] Fiscal 2024 Outlook - Management retained its fiscal 2024 forecast, expecting a 1% increase in sales year-over-year, including $2.3 billion from an additional 53rd week [6] - Comparable sales are anticipated to decline by 1% for the 52-week period, with plans to open 12 new stores [6] - Gross margin is expected to be 33.9%, and operating margin is projected at 14.1% for fiscal 2024 [6] - The effective tax rate is estimated at 24.5%, with interest expenses likely to be $1.8 billion [6] - Earnings per share are expected to increase by 1% year-over-year, with the 53rd week contributing 30 cents per share [6]