Home Depot Inc (HD.N) on Tuesday fell short of U.S. same-store sales estimates for the first time in nearly two years, as do-it-yourself projects during the height of the pandemic tapered off, sending shares of the retailer down 3% in premarket trade.
Home-improvement chains had a blockbuster 2020 as revenue and profit surged from stuck-at-home Americans splurging on paint, tools, and gardening equipment to upgrade their living spaces through DIY projects. Fresh government stimulus floated earlier this year also helped lift demand.
The steady rollout of COVID-19 vaccines, however, prompted more Americans to return to outdoor activities and abandon some pandemic-induced shopping habits.
U.S. same-store sales at Home Depot climbed 3.4% in the second quarter ended Aug. 1 – the smallest increase in two years, and missed analysts’ estimates of a 4.9% rise, according to IBES data from Refinitiv.
Foot traffic at Home Depot stores fell every month during the reported quarter, with the biggest drop coming in May when traffic slumped 12.1%, according to data firm Placer.ai.
The slowdown in sales lowers expectations for smaller rival Lowe’s Cos Inc (LOW.N), which is even more dependent on DIY consumers than Home Depot, J.P. Morgan analysts said in a note.
Lowe’s is expected to report its quarterly numbers on Wednesday.
In comparison to Lowe’s, Home Depot has a much larger customer base of professional builders and contractors, who have been spending more on big-ticket items such as tools and building materials to housing projects that were put off during the pandemic.
The trend helped push Home Depot’s quarterly net sales up 8.1% to a record $41.12 billion, while its net earnings rose 11% to $4.81 billion. The home-improvement retailer earned $4.53 on a per-share basis, beating estimates of $4.44 per share.
Shares of the Atlanta, Georgia-based company have gained more than 26% this year.