Home Depot 4Q Sales Fall 2.9% as Pro Levels with DIY - Modern Distribution Management

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Home Depot 4Q Sales Fall 2.9% as Pro Levels with DIY

CEO Ted Decker noted that 2023 was "a year of moderation" for the DIY and contractor supply retail giant.
The company named William 'Billy' Bastek Executive Vice President of Merchandising, effective immediately.

Do-it-yourself and contractor supply retail giant The Home Depot reported its 2023 fourth quarter and full-year financial results on Feb. 20, showing modest quarterly and annual sales decreases.

The company posted total 4Q sales of $34.8 billion, down 2.9% year-over-year, with comparable sales down 3.5%, including U.S. comparable sales that were down 4.0%. The company’s 4Q gross margin of 33.1% ticked down 10 basis points year-over-year.

The Home Depot netted a 4Q operating profit of $4.14 billion, down 12.8% year-over-year, while net profit of $2.8 billion was down from the $3.4 billion of a year earlier.

The company showed that 4Q customer transaction volume fell 1.7% year-over-year; average ticket of $88.87 fell 1.3% and sales per retail square foot slid 3.6%. 4Q big-ticket transactions ($1,000+) were down 6.9% year-over-year. Those selected sales figures don’t include results for subsidiary HD Supply.

The Home Depot said its Pro and DIY customer’s performance was “relatively in line” with one another, and that company research indicates that while Pro backlogs are lower than they were a year ago, they have remained stable and elevated relative to historical norms.

For the full-year, The Home Depot posted total 2023 sales of $142.7 billion, down 3.0% from 2022. Comparable sales were down 3.2%, with U.S. comparable sales down 3.5%. Full-year gross margin of 33.4% ticked down from 2022’s 33.5%.

The company’s 2023 operating profit of $21.7 billion fell 9.8% vs. 2022, while net profit of $15.1 billion trailed 2022’s $17.1 billion.

Full-year customer transaction volume fell 2.7% vs. 2022; average ticket of $90.07 ticked down 0.3%; and sales per retail square foot fell 3.6%.

“After three years of exceptional growth for our business, 2023 was a year of moderation,” company Chairman, President and CEO Ted Decker in The Home Depot’s 4Q earnings release. “During fiscal 2023, we focused on several initiatives to strengthen the business while also staying true to our strategic investments of creating the best interconnected experience, growing our pro wallet share through our unique ecosystem of capabilities and building new stores. We remain excited about the future for home improvement and our ability to grow share in our large and fragmented market, which we estimate to be over $950 billion.”

2024 Outlook

Looking forward, the company is forecasting 2024 annual sales to grow approximately 1.0% vs. 2023, including an additional selling week that is projected to add about $2.3 billion to total sales. Meanwhile, comparable sales are forecasted to decline about 1.0%.

The Home Depot expects to net add about 12 new stores in 2024 and expects full-year gross margin of approximately 33.9% and operating margin of 14.1%.

Other Notes

  • In its 4Q earnings call with industry analysts, The Home Depot said that in December is completed it previously announced acquisition of Construction Resources, a distributor of design-oriented surfaces, appliances and architectural specialty products for Pro contractors focused on renovation, remodeling and residential home building.
  • The Home Depot ended 2023 with a global retail store count of 2,335, including 2,015 in the U.S., 182 in Canada and 138 in Mexico.
  • In 2023, The Home Depot opened 13 new stores — eight in the U.S. and five in Mexico.
  • The company expects to poen about 80 new stores over the next 5 years.
  • Total company digital sales increased approximately 2% in 4Q year-over-year.

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