Home Depot reported better-than-expected earnings and revenue for the third quarter. The company beat estimates despite a slight dip in customer traffic. Sales grew 6.6% year-over-year to $40.217 billion, surpassing the consensus estimate of $39.173 billion.
Customer transactions fell 0.2% for the quarter, and comparable sales decreased by 1.3%. In the U.S., comparable sales dropped 1.2%. Gross profit rose 5.4% to $13.425 billion, with a margin of 33.4%, down 40 basis points from the previous year.
The operating margin was 13.5%, down 86 basis points year-over-year. Operating income dropped slightly by 0.22% to $5.418 billion. Adjusted operating margin slipped to 13.8% from 14.5%.
Operating expenses increased 9.2% to $8.01 billion. Adjusted earnings per share saw a slight decline of 1.8% to $3.78.
Earnings growth despite lower transactions
The average ticket in the third quarter was $88.65, a decrease of 0.8%. Sales per retail square foot declined by 2.1% to $582.97. Home Depot held $1.531 billion in cash and equivalents as of October 27.
It generated an operating cash flow of $15.139 billion for the first nine months of the year, compared to $16.439 billion in the same period last year. The company operated 2,345 retail stores and over 780 branches across the U.S., Canada, and Mexico at the end of the quarter. Ted Decker, chair, president, and CEO, commented, “While macroeconomic uncertainty remains, our third-quarter performance exceeded our expectations.
As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects as well as incremental sales related to hurricane demand.”
Home Depot has raised its full-year sales guidance to $158.78 billion, versus the $157.33 billion consensus. The company expects comparable sales to decline approximately 2.5%. Adjusted EPS is anticipated to be $15.10, slightly lower than $15.25 in the prior fiscal year but above the consensus of $14.84.
Home Depot projects a gross margin of around 33.5% and an adjusted operating margin of 13.8%. HD shares were trading higher by 1.56% at $414.65 in premarket trading on Tuesday.
