The Home Depot, the world’s largest home improvement retailer, is shrinking its 2024 earnings guidance.
“After three years of exceptional growth for our business, 2023 was a year of moderation. During fiscal 2023, we focused on several initiatives to strengthen the business while also staying true to our strategic investments of creating the best interconnected experience, growing our pro wallet share through our unique ecosystem of capabilities, and building new stores,” Home Depot Chair, President and CEO Ted Decker said on Tuesday’s (Feb. 20) fourth-quarter and fiscal 2023 earnings call.
“We remain excited about the future for home improvement and our ability to grow share in our large and fragmented market, which we estimate to be over $950 billion,” Decker added.
The company’s sales for the fiscal year 2023 were $152.7 billion, a decrease of 3.0%, from the year prior. Comparable sales for fiscal 2023 decreased 3.2%, and comparable sales in the U.S. decreased 3.5%.
Quarterly sales for 2023’s final quarter showed a similar slump of just over 3%.
Home Depot cited slowing demand in its weaker than expected full-year outlook for 2024, and on Tuesday’s earnings call, executives underscored the macro challenges the retailer — and its customers — face coming out of a multi-year pandemic period when money was cheaper, and time for home improvements was more plentiful.
The company did surpass analyst expectations for the quarter, and management noted that the sales declines could be offset by a busy spring and summer, which are traditionally the home improvement sector’s most active windows.
“Our interconnected pro experiences and new stores will help us grow in any environment,” Home Depot Chief Financial Officer Richard McPhail said. The company anticipates opening around 12 stores this year.
While Home Depot’s business is split around 50-50 between professional builders and contractors and everyday homeowners and DIY consumers, the company sees the pro segment as its more reliable growth engine.
“The underpinning of this market segment is incredibly strong,” said McPhail.
“We are going to strengthen our position with customers and leverage scale to grow faster than the market,” added Decker.
Read more: Home Depot Sees B2B Driving Growth ‘For Years and Years’
Larger professional shoppers with more complex spend comprise a key way for Home Depot to drive sales, and the company has been adamant about its efforts to build a pro ecosystem that includes credit and financing products, digital capabilities, field support, rentals and more.
“In 2024, we will continue learning and building out new capabilities for the complex Pro. We are expanding our assortments, fulfillment options, and our outside sales force and just recently began piloting trade credit options. In addition, we continue to work on new order management capabilities to better manage complex Pro orders. For the complex Pro opportunity, this means that by the end of 2024, we will have 17 of our top pro markets equipped with new fulfillment options, localized product assortment, and expanded sales force and enhanced digital capabilities with trade credit and order management in pilot for development,” said CEO Decker.
“As we invest in our pros and our capabilities to be able to service their larger jobs, trade credit is definitely necessary,” Chip Devine, SVP of outside sales, told investors during the call’s Q&A session.
“We have a lot of initiatives in 2024 geared at growing or share of wallet with the Pro,” said Ann-Marie Campbell, senior executive vice president of U.S. stores and operations.
Campbell explained to investors that one of the “biggest areas of opportunity” is “within the post-sale experience,” which has been “largely unchanged” for the past 44 years, adding that Home Depot’s “convenience for the customer is nearly impossible to replicate.”
“I can say within our pro … the managed account customer who’s engaging in the ecosystem that we’re building was the highest performing customer segment,” CEO Decker noted.
Digital momentum was also highlighted by executives as a positive driver across both DIY and complex pro segments, with Home Depot leaning on investments across the online experience to power differentiation within the home improvement category, as well as to modernize the company’s own back-end programs and inventory management.
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