HD Jun 2024 400.000 put

Home Depot may see sales drop as consumers seek value: Analyst

Home Depot (HD) is set to report earnings this week, giving investors an inside look into the state of consumer spending. HSBC US Consumer Staples Senior Analyst Daniela Bretthauer joins Catalysts to discuss what to expect from Home Depot's earnings as home improvement spending fell more than 1% year over year, according to Harvard's Joint Center for Housing Studies. "Consumers remain focused on value and price," Bretthauer says. "They're shifting their spending patterns to make ends meet." She notes that Home Depot's bigger-ticket items were in demand during the pandemic as homeowners took on more home improvement projects. However, as that demand declines, she expects the company's quarterly sales to decrease by 2% to 3%. Bretthauer adds that as wallets tighten amid higher inflation, more home remodelings and improvements are being put on the back burner. "The fact that rates remain high still and the interest rates cuts have been delayed, probably we're only going to see one cut this year. So that doesn't bode as well for people looking to buy new homes," she explains. For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Melanie Riehl