Home Depot Falls as Sales Outlook Slows and Housing Starts Lose Steam
![Home Depot Home Depot](/sites/default/files/styles/article_full_width_image/public/images/articles/homedepotmain.jpg)
Home Depot Inc. shares fell on Feb. 26 after the retailer said sales gains will start to cool off this year — mirroring a trend in the U.S. housing market.
Fourth-quarter sales also fell shy of analysts’ average estimate — a rare occurrence for the home improvement chain. The performance was hindered by cold, snowy weather, CEO Craig Menear said on a conference call.
“Investors were fearful of the sales miss,” said Seema Shah, an analyst for Bloomberg Intelligence. Home Depot rarely misses guidance, so that “was a little bit shocking.”
Home Depot has been buoyed for years by rising housing prices in the U.S. — homeowners are more likely to invest in improvements if they feel it will boost their home’s value. But there are signs that the market is cooling: Prices in 20 U.S. cities rose in December at the slowest pace in four years, according to the S&P CoreLogic Case-Shiller index of property values. If the trend continues, it could sap some energy from the Atlanta-based retailer.
![Image](/sites/default/files/homedepotgraph.jpg)
The company’s shares fell as much as 3.7% to $182.92 in New York — the most since October. The stock had gained 11% this year through close Feb. 25, in line with the S&P 500.
Fourth-quarter earnings per share were $2.09, short of analysts’ average estimate of $2.16. Same-store sales — a key gauge of a retailer’s success — rose 3.2%, trailing the estimate of 4.5% from Consensus Metrix. Excluding the impact from weather, sales met expectations, Menear said.
Home Depot sees comparable-store sales growing 5% this year — just short of 2018’s rate of 5.2%. That rate would be the weakest since 2012. Even so, Shah said it was a “bullish” forecast and noted that the fourth quarter is not as meaningful as the spring selling season the company is about to enter.
![Image](/sites/default/files/homedepotgraph2.jpg)
The company took steps to bolster the stock, including an increase to its quarterly dividend by 32%, and a $15 billion stock buyback program, with about $5 billion in repurchases for the current fiscal year.
Home Depot joined a host of other U.S. retailers that posted disappointing sales recently. The results came amid a historic cold snap in the U.S., where it generates more than 90% of its sales, and a shutdown of the federal government.