Home Depot on Tuesday reported stronger than expected financial results for its fourth quarter of fiscal 2024, defying Wall Street's forecasts amid an increasingly cautious consumer market. Despite facing headwinds from high interest rates and elevated housing prices, the home improvement giant achieved quarterly sales of $39.7 billion, marking a significant increase of 14% from $34.79 billion during the same quarter last year.
Net income for the quarter rose to $3.0 billion, or $3.02 per share, up from $2.80 billion, or $2.82 per share, from the previous fiscal year. Competitively, Home Depot's adjusted earnings per share reached $3.13, compared to $2.86 year-over-year, exceeding the $3.01 expected by analysts.
Home Depot Chief Financial Officer Richard McPhail acknowledged the persistent challenges affecting consumer behavior, stating, "Housing is still frozen by mortgage rates." He elaborated on how elevated interest rates have deterred consumers from making significant investments for home renovations, as they navigate financial pressures.
Despite these challenges, Home Depot observed positive growth trajectories across various categories. Sales increased broadly, with growth seen in about 50% of its merchandise categories and 15 of its 19 U.S. geographic regions. The company's CFO noted, "They tell us their lives are moving on. Their families are growing. They're moving for new jobs. They're upsizing their home." These comments highlight consumers’ adaptability, reflecting shifting priorities as they engage with home improvement projects.
The fourth quarter marked the end of eight consecutive quarters of declining comparable sales. Home Depot reported comparable sales increased by 0.8%, led by U.S. comparable sales rising 1.3%. McPhail attributed part of this growth to regions affected by hurricanes, which contributed approximately 0.6% to comparable sales figures.
Customer spending during the quarter was also noteworthy, with increased transactions jumping to 400.4 million, representing nearly 8% growth from last year. The average ticket per customer rose slightly to $89.11, up from $88.87 during the same period last year. Nevertheless, Home Depot faced broader challenges with inflation's impact on consumer behavior, as many opted for less expensive products or delayed larger projects.
To adapt to these market conditions, Home Depot has focused efforts on its online sales platform, which climbed 9% year over year during Q4, marking the strongest quarter for its digital business. Investments aimed at enhancing delivery speed and convenience, particularly for appliances and tools, were key factors contributing to online sales growth.
On the operational front, Home Depot opened 12 new stores during 2024 and planned to establish 13 more locations soon. This strategic initiative reflects the company's commitment to not only maintaining but also building upon its existing customer base, including professionals who drive significant sales across various segments, from roofing to landscaping supplies.
Despite successful Q4 results, Home Depot's outlook for fiscal 2025 reflects tempered expectations. The company anticipates total sales growth of approximately 2.8%, with comparable sales projected to increase by around 1.0%. For adjusted earnings per share, Home Depot expects to see about 2% decline compared to the previous fiscal year.
CEO Ted Decker expressed cautious optimism, stating, "Our fourth quarter results exceeded our expectations as we saw greater engagement in home improvement spending, amid pressure on large remodeling projects." His confidence aligns with the company's commitment to navigate through uncertain economic conditions with strategic investments and operational enhancements.
Looking forward, Home Depot is clearly positioned for the long haul, making calculated bets on its future growth opportunities. With the backdrop of adjusting consumer spending habits and economic uncertainties, the retailer continues to track closely on both the macroeconomic signals and its structural initiatives to maintain its market leadership.
Home Depot's shares closed at $382.42 post-reporting, reflecting about 2% decline year-to-date, trailing behind the S&P 500's gains within the same period. Analysts and investors remain eager for updates as the company navigates its strategic plans and adapts to the changing home improvement market.