Home Depot Shares Plunge Most Since 2008 After Slashing Sales Outlook

Home Depot shares slumped more than 7% in premarket trade, putting shares on track for their worst daily drop since 2008, after the company slashed its full-year sales guidance on Tuesday.

The company also posted Q3 sales that slightly missed expectations.

Here’s BBG’s breakdown of the company’s Q3 earnings report…

• Sees FY comparable sales about +3.5%, saw about +4%
• Sees FY revenue about +1.8%, saw about +2.30%
• 3Q comparable sales +3.6% vs. +4.80% y/y, estimate +4.6% (Consensus Metrix, average of 25 estimates)
• 3Q EPS $2.53 vs. $2.51 y/y, estimate $2.53 (range $2.48 to $2.58) (Bloomberg data)
• 3Q net sales $27.22 billion, +3.5% y/y, estimate $27.52 billion (range $27.35 billion to $27.72 billion) (BD)
• 3Q U.S. comparable sales +3.8% vs. +5.40% y/y
• 3Q average ticket sales $66.36, +1.9% y/y
• 3Q total location count 2,290, estimate 2,290 (Bloomberg MODL)
• 3Q customer transactions +1.5%
• 3Q average ticket +1.9%, estimate +2.41% (MODL)

The action in Home Depot shares weighed on Dow futures ahead of the bell:

Home Depot CEO Craig Menear cited continued lumber deflation for the lower sales forecast.

 

 

Read the company’s press release below:

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ATLANTA, November 19, 2019 — The Home Depot, the world’s largest home improvement retailer, today reported third quarter fiscal 2019 sales of $27.2 billion, an increase of 3.5 percent, or $921 million, compared to the third quarter of fiscal 2018. Comparable sales for the third quarter of fiscal 2019 were positive 3.6 percent, and comparable sales in the U.S. were positive 3.8 percent. Net earnings for the third quarter of fiscal 2019 were $2.8 billion, or $2.53 per diluted share, compared with net earnings of $2.9 billion, or $2.51 per diluted share, in the same period of fiscal 2018.

For the third quarter of fiscal 2019, diluted earnings per share increased 0.8 percent from the same period in the prior year. “Our third quarter results reflected broad-based growth across our business, yet sales were below our expectations driven by the timing of certain benefits associated with our One Home Depot strategic investments,” said Craig Menear, chairman, CEO and president. “We are largely on track with these investments and have seen positive results, but some of the benefits anticipated for fiscal 2019 will take longer to realize than our initial assumptions. As a result, today we are updating our fiscal 2019 sales guidance, and we are reaffirming our fiscal 2019 earnings-per-share guidance. We are encouraged by the momentum in our business as we invest to extend our competitive advantages. I would like to thank our associates for their hard work and continued dedication to our customers.”

Fiscal 2019 Guidance

The Company updated its guidance for fiscal 2019, a 52-week year compared to fiscal 2018, a 53-week year. The Company expects its fiscal 2019 sales to grow by approximately 1.8 percent and comp sales for the comparable 52-week period to increase approximately 3.5 percent. This compares to the Company’s prior fiscal 2019 sales growth guidance of 2.3 percent and comp sales growth of 4.0 percent. The Company reaffirmed its diluted earningsper-share guidance for the year and expects diluted earnings-per-share growth of approximately 3.1 percent from fiscal 2018 to $10.03. The Home Depot will conduct a conference call today at 9 a.m. ET to discuss information included in this news release and related matters. The conference call will be available in its entirety through a webcast and replay at http://ir.homedepot.com/events-and-presentations. At the end of the third quarter, the Company operated a total of 2,290 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. The Company employs more than 400,000 associates. The Home Depot’s stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor’s 500 index.