But don’t tell Home Depot that. The home improvement retail giant reported record revenues and sales for its most recent quarter.
The numbers were strong across the board. Sales at stores that have been open for at least a year increased 5.4% from the same quarter in 2021 in the United States and 5.8% in all locations worldwide. The company also reiterated its full-year earnings and outlook.
“Our performance reflects continued strong demand for home improvement projects,” said Home Depot CEO and President Ted Decker in the release of the results. Decker added that these were the highest quarterly earnings and sales figures in the company’s history, despite “a challenging and dynamic environment.”
Shares of Home Depot rose 5% in afternoon trading Tuesday after initially falling in premarket trading.
Investors may have initially focused on the one negative in the Home Depot report: Customers haven’t made as many purchases as they did a year ago. The number of total transactions decreased by 3%. But this decline in activity was offset by customers spending more on what they did buy. The average sales ticket was just over $90, up 9% from last year.
Much of that spending spike was due to inflation. said Jeffrey Kinnaird, Home Depot’s Executive Vice President of Merchandising, during a conference call with analysts.
But Decker also said on the conference call that Home Depot saw no material signs of weakness in the housing market. He noted that demand was strong from both professional contractors and DIY consumers.
“As people spend more time in their homes, so repair and remodeling, demand will increase through wear and tear. You’ll want more space and home improvements just because you’re there more often,” Decker said. during the conversation.
People want to fix their house and have the money to do it. Chief financial officer Richard McPhail said during the conference call that “our client is just in a really good place right now.” He attributed this largely to the rise in house prices in recent years.
And whatever happens to home sales, the trend of spending even more on their homes could continue, especially if the economy cools further this year and into 2023.
“The home improvement industry typically performs well during recessions,” Third Bridge analyst Shoggi M. Ezeizat said in a report Tuesday. “We expect consumer demand to shift towards smaller-scale remodeling projects as individuals view their homes as stable investments during economic uncertainty.”