On Tuesday, Home Depot posted earnings for the first quarter that beat expectations on Wall Street, but missed the top line, after being pulled down by what it called a spring selling season that started slow.
Customer transactions for the three month period were down 1.3%, though shoppers’ average ticket of $66 was 5.8% higher than the same period one year ago.
Spring is when many Home Depot shoppers buy their gardening supplies and begin any home renovations, making it an important quarter for retailers in the home improvement sector.
Besides the seasonal business, solid results were obtained in every market and category and strong momentum is being seen in all business lines during the first couple of weeks of May, CEO Craig Menear said.
Shares of Home Depot fell over 2% in trading before the opening bell on Tuesday following the release of its quarterly earnings.
Home Depot earnings reached $2.08 a share compared to analyst expectations of $2.05 a share. Revenue reached $24.95 billion while analysts were expecting $25.15 billion. Sales growth for same-stores was 4.2% while analysts were expecting 5.4%.
During its first quarter, which ended on April 29, the home improvement giant said its net income reached $2.40 billion equal to $2.08 a share compared to $2.01 billion equal to $1.67 a shares last year during the same period.
While its revenue increased by 4.4% it came in below the analyst expectations as did growth in sales for same-stores.
Several analysts last week reduced their estimates for the first quarter at Home Depot, citing the poor weather during the spring. The majority of analysts believe that spring projects will be shifted to the summer and not entirely abandoned by homeowners.
Home Depot has benefitted from a housing market that has been strong and a favorable economy. Home improvement has been one of the best performers in retail and has been boosted in part by the recovery needed after severe weather the last year.
Home Depot has also built out its strategy on e-commerce surpassing Lowe’s its rival in that area.
On Tuesday, Home Depot said it would stick to its previously released 2018 forecast. It said it was expecting sales to increase by 6.5% and that sales at same stores would grow by 5%.
It added that new rules related to revenue recognition will not impact materially on its financial disclosures or statements.