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Home Depot Cuts Sales Outlook On Tariffs, Lumber Price Deflation By Bloomberg

© Reuters. Home Depot Cuts Sales Outlook on Tariffs, Lumber Price Deflation

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Home Depot Inc. (NYSE :). cut its revenue forecast on lumber price deflation and concern that President Donald Trump's recently announced tariffs will hurt the US consumption.

  • Same-store sales – a key gauge of a retailer's performance – rose 3% in the second quarter, trailing the average 3.2% projection, according to Consensus Metrix. The company now sees 4% growth for the full year, down from a previous forecast of 5%.

Key Insights

  • For years since the Home Depot recession has been riding the tide of rising home prices, since homeowners often spend more when they see their properties increasingly as an investment. But the overall home market has been moderating since a few years ago, and now the 20% drop in lumber costs over the past year is adding to the price pressure for Home Depot.
  • Tariffs remain a question mark for consumer-facing companies, challenged by rising costs for some goods as the Trump administration sets to launch more duties on imports from China.
  • About a two-quarter lag for orders, meaning the follow-through of slowing home building is still hitting companies like Home Depot that are closely related to housing. Still, the company maintained its earnings per share forecast for the year.

Market Reaction

  • Home Depot fell as much as 0.5% in premarket trading Tuesday ahead of the announcement. The stock had advanced 21% this year through Monday's close, surpassing gains in the S&P 500 Index.

Get More

  • For more on the results, click here.
  • For the company statement, click here.
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