Sales and profit both decreased on a year-over-year basis in the second quarter for home-improvement retailer The Home Depot. President and CEO Ted Decker said the company saw strength in categories associated with smaller projects, but big-ticket discretionary spending categories weakened relative to the prior-year period.
“We remain very positive on the medium-to-long term outlook for home improvement and our ability to grow share in the large and fragmented market,” Decker said in the news release announcing quarterly earnings.
During the company’s earnings call with analysts, Decker said The Home Depot experienced strength in project-related categories, including building materials, hardware, and plumbing. For the second straight quarter, pro sales performance was slightly negative during the second quarter. Pro sales continued to outpace DIY customer sales, but Decker said pro customer backlogs are much lower than they were a year ago.
[Backlogs] are still healthy and elevated relative to historical norms,” Decker said on the earnings call. “Additionally, projects in these backlogs are generally smaller in scale and scope.”
The Home Depot’s comp average ticket in the second quarter was positive on a year-over-year basis, while comp transactions decreased by 2%. Executive vice president of merchandising Billy Bastek said the comp average ticket was impacted by inflation across several product categories, as well as demand for new products.
Big-ticket comp transactions—those over $1,000—were down 5.5% compared to the second quarter of 2022.
“After three years of unprecedented demand in the home improvement market, we continue to see softer engagement in big-ticket discretionary categories, like patios and appliances, that likely reflects both pull-forward of these single item purchases and deferrals,” Bastek said.
Sales leveraging digital platforms increased 1% compared to the prior-year period, and nearly half of the retailer’s online orders were fulfilled in store.
For the quarter, sales decreased 2.0% year-over-year to $42.9 billion and comparable sales decreased 2.0% in the United States. Net earnings for the quarter decreased to $4.7 billion in 2023 from $5.2 billion in the second quarter of 2022.
