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Home Depot is still coming down from the highs of the pandemic-era DIY remodeling boom; sales fell 2% year over year in the second quarter, according to the company’s latest earnings report.
The world’s largest home improvement retailer nonetheless beat Wall Street estimates on the back of some positive trends, including sustained consumer spending on smaller projects that offset weakening demand for big-ticket, discretionary items such as appliances and patio furniture.
“Big-ticket [comparable] transactions or those over $1,000 were down 5.5% compared to the second quarter of last year,” Billy Bastek, EVP of merchandising, told investors during an earnings call on Thursday. He added that the decrease came “after three years of unprecedented demand in the home improvement market.”
The flip side of the DIY shift is that larger projects appear to be on hold.
“Our customers and our contractors tell us that there is some stance of deferral when it comes to large projects,” CFO Richard McPhail said during the call.
In the meantime, costs are coming down, which is easing pressure on Home Depot’s bottom line. CEO Ted Decker said inflation will continue to moderate in the second half of the year—which could mean lower ticket prices on cheapening goods such as lumber, which is down 40% per thousand board feet from Q2 2022, Bastek noted.
Home Depot had a good run in the aftermath of the pandemic, but it now appears to be trying to settle into a new normal, with less demand than during the highs of 2021 and 2022, but also lower costs. Decker acknowledged it was a time of transition for the retailer, calling 2023 “a year of moderation after the explosive growth we had the prior few years.”