Timber prices and punitive tariffs dampen Home Depot expectations

The fall in the price of timber and the announcement of further punitive tariffs have caused Home Depot to downplay its sales expectations. Instead of overall growth of 3.3 per cent, the global market leader now anticipates an increase of 2.3 per cent in fiscal 2019/2020, and for like-for-like sales 4.0 per cent instead of 5.0 per cent. This emerged from the company's latest quarterly report. In the second quarter (ended 4 August 2019) Home Depot reported sales of USD 30.389 bn, an increase of 1.2 per cent compared with the same period in the previous year. Like-for-like growth came to 3.0 per cent in total, and 3.1 per cent in the USA. The wide discrepancy between absolute and like-for-like growth rates was attributable to the fact that fiscal 2018 had 53 weeks.
"We are encouraged by the momentum we are seeing from our strategic investments and believe that the current health of the U.S. consumer and a stable housing environment continue to support our business. That being said, lumber prices have declined significantly compared to last year, which impacts our sales growth. As a result, today we are updating our sales guidance to account primarily for continued lumber price deflation, as well as potential impacts to the U.S. consumer arising from recently announced tariffs. We are reaffirming our earnings-per-share growth guidance for fiscal 2019."