A continued surge in home renovations amid a shortage of available houses and soaring real estate prices pushed Home Depot sales over $150 billion for the first time last year, the company reported Tuesday.
Annual sales for the fiscal year floated 14.4% higher than the previous year on the rising tide of both professional contractors and do-it-yourselfers.
Over the last two years as the pandemic roiled the nation, Home Depot sales surged by more than $40 billion, said Craig Menear, company chairman and chief executive, during a conference call with industry analysts.
Home Depot officials say they expect the expansion to continue. However, they were hesitant to say just how much growth is expected in a time when the economic tea leaves are hard to read.
Inflation last year was at a 40-year high, but has shown some signs of peaking. Global supply chains are improved, but still spotty. The federal stimulus checks that fueled growth have ended, but consumer spending has continued. The coronavirus continues to kill thousands of Americans, but pandemic constraints seem to not be holding back the economy.
Meanwhile, the Federal Reserve has all-but-promised to raise interest rates, which typically hinders consumption and chills housing.
“The macro-economic environment is dynamic and it’s difficult to build assumptions,” Richard McPhail, Home Depot’s chief financial officer, told The Atlanta Journal-Constitution.
The company declined to make predictions on interest rates or inflation. But based on the past two quarters, Home Depot expects sales to be “slightly positive” this year, he said. “We think the fundamentals underlying home improvement demand is strong, but it’s not an exact science at the moment. I do not want to give you a false precision.”
Worry about interest rates and inflation have flowed through Wall Street, eroding the value of companies that depend on robust spending, especially in the housing market. And the Russian invasion of Ukraine sent an array of stocks diving.
Home Depot stock has been sliding since hitting an all-time high above $416-a-share in early December. At the closing bell Tuesday, shares were trading at $316.17, down nearly 9% for the day. That was much sharper than the Dow Jones Industrial Average drop of 1.4%.
Home Depot’s plunge cannot be wholly blamed on global events, said Kenneth Leon, director of research at CFRA Research in New York.
The company’s cautious outlook makes it less attractive to many investors than it was during the fast-and-furious growth of the past two years, he said. However, the company’s overall strength and long-term prospects, makes the lower share price “an enhanced buying opportunity,” he said.
Home Depot, whose revenue is larger than any other Georgia company, has 90 stores and about 30,000 employees in the state. Overall, Home Depot has about 500,000 employees at 2,317 stores.
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