The Home Depot Announces Third Quarter Fiscal 2023 Results; Narrows Fiscal 2023 Guidance
- The Home Depot's net earnings for the third quarter of fiscal 2023 were $3.8 billion, showing the company's continued profitability despite the sales decline.
- Comparable sales in the U.S. decreased by 3.5%, indicating a specific struggle within the domestic market.
Net earnings for the third quarter of fiscal 2023 were
"Our quarterly performance was in line with our expectations," said Ted Decker, chair, president and CEO. "Similar to the second quarter, we saw continued customer engagement with smaller projects, and experienced pressure in certain big-ticket, discretionary categories. We remain very excited about our strategic initiatives and are committed to investing in the business to deliver the best interconnected shopping experience, capture wallet share with the Pro, and grow our store footprint. In addition, our associates did an outstanding job delivering value and service for our customers throughout the quarter and I would like to thank them for their dedication and hard work."
Fiscal 2023 Guidance
The company narrowed its prior fiscal 2023 guidance range:
- Sales and comparable sales to decline between
3% and4% compared to fiscal 2022 - Operating margin rate to be between
14.2% and14.1% - Tax rate of approximately
24.5% - Interest expense of approximately
$1.8 billion - Diluted earnings-per-share-percent-decline between
9% and11% compared to fiscal 2022
The Home Depot will conduct a conference call today at 9 a.m. ET to discuss information included in this news release and related matters. The conference call will be available in its entirety through a webcast and replay at ir.homedepot.com/events-and-presentations.
At the end of the third quarter, the company operated a total of 2,333 retail stores in all 50 states, the
Certain statements contained herein constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the demand for our products and services; net sales growth; comparable sales; the effects of competition; our brand and reputation; implementation of store, interconnected retail, supply chain and technology initiatives; inventory and in-stock positions; the state of the economy; the state of the housing and home improvement markets; the state of the credit markets, including mortgages, home equity loans, and consumer credit; the impact of tariffs; issues related to the payment methods we accept; demand for credit offerings; management of relationships with our associates, potential associates, suppliers and service providers; cost and availability of labor; costs of fuel and other energy sources; international trade disputes, natural disasters, climate change, public health issues, cybersecurity events, military conflicts or acts of war, supply chain disruptions, and other business interruptions that could compromise data privacy or disrupt operation of our stores, distribution centers and other facilities, our ability to operate or access communications, financial or banking systems, or supply or delivery of, or demand for, our products or services; our ability to address expectations regarding environmental, social and governance matters and meet related goals; continuation or suspension of share repurchases; net earnings performance; earnings per share; future dividends; capital allocation and expenditures; liquidity; return on invested capital; expense leverage; changes in interest rates; changes in foreign currency exchange rates; commodity or other price inflation and deflation; our ability to issue debt on terms and at rates acceptable to us; the impact and expected outcome of investigations, inquiries, claims, and litigation, including compliance with related settlements; the challenges of international operations; the adequacy of insurance coverage; the effect of accounting charges; the effect of adopting certain accounting standards; the impact of legal and regulatory changes, including changes to tax laws and regulations; store openings and closures; guidance for fiscal 2023 and beyond; financial outlook; and the impact of acquired companies on our organization and the ability to recognize the anticipated benefits of any acquisitions. Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You should not rely on our forward-looking statements. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties – many of which are beyond our control, dependent on the actions of third parties, or currently unknown to us – as well as potentially inaccurate assumptions that could cause actual results to differ materially from our historical experience and our expectations and projections. These risks and uncertainties include, but are not limited to, those described in Part I, Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for our fiscal year ended January 29, 2023 and also as may be described from time to time in future reports we file with the Securities and Exchange Commission. There also may be other factors that we cannot anticipate or that are not described herein, generally because we do not currently perceive them to be material. Such factors could cause results to differ materially from our expectations.
Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our filings with the Securities and Exchange Commission and in our other public statements.
THE HOME DEPOT, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
in millions, except per share data | October 29, | October 30, | % Change | October 29, | October 30, | % Change | |||||
Net sales | $ 37,710 | $ 38,872 | (3.0) % | (3.0) % | |||||||
Cost of sales | 24,972 | 25,648 | (2.6) | 78,431 | 80,720 | (2.8) | |||||
Gross profit | 12,738 | 13,224 | (3.7) | 39,452 | 40,852 | (3.4) | |||||
Operating expenses: | |||||||||||
Selling, general and administrative | 6,649 | 6,468 | 2.8 | 19,919 | 19,735 | 0.9 | |||||
Depreciation and amortization | 683 | 608 | 12.3 | 1,987 | 1,830 | 8.6 | |||||
Total operating expenses | 7,332 | 7,076 | 3.6 | 21,906 | 21,565 | 1.6 | |||||
Operating income | 5,406 | 6,148 | (12.1) | 17,546 | 19,287 | (9.0) | |||||
Interest and other (income) expense: | |||||||||||
Interest income and other, net | (49) | (7) | N/M | (123) | (12) | N/M | |||||
Interest expense | 487 | 413 | 17.9 | 1,430 | 1,166 | 22.6 | |||||
Interest and other, net | 438 | 406 | 7.9 | 1,307 | 1,154 | 13.3 | |||||
Earnings before provision for income taxes | 4,968 | 5,742 | (13.5) | 16,239 | 18,133 | (10.4) | |||||
Provision for income taxes | 1,158 | 1,403 | (17.5) | 3,897 | 4,390 | (11.2) | |||||
Net earnings | $ 3,810 | $ 4,339 | (12.2) % | $ 12,342 | $ 13,743 | (10.2) % | |||||
Basic weighted average common shares | 996 | 1,020 | (2.4) % | 1,002 | 1,024 | (2.1) % | |||||
Basic earnings per share | $ 3.83 | $ 4.25 | (9.9) | $ 12.32 | $ 13.42 | (8.2) | |||||
Diluted weighted average common shares | 999 | 1,023 | (2.3) % | 1,005 | 1,028 | (2.2) % | |||||
Diluted earnings per share | $ 3.81 | $ 4.24 | (10.1) | $ 12.28 | $ 13.37 | (8.2) | |||||
Three Months Ended | Nine Months Ended | ||||||||||
Selected Sales Data (1) | October 29, | October 30, | % Change | October 29, | October 30, | % Change | |||||
Customer transactions (in millions) | 399.8 | 409.8 | (2.4) % | 1,249.8 | 1,287.9 | (3.0) % | |||||
Average ticket | $ 89.36 | $ 89.67 | (0.3) | $ 90.42 | $ 90.45 | — | |||||
Sales per retail square foot | $ 595.71 | $ 618.50 | (3.7) | $ 623.17 | $ 646.81 | (3.7) | |||||
(1) | Selected Sales Data does not include results for HD Supply. | ||||||
THE HOME DEPOT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
| |||||
in millions | October 29, | October 30, | January 29, | ||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ 2,058 | $ 2,462 | $ 2,757 | ||
Receivables, net | 3,932 | 3,732 | 3,317 | ||
Merchandise inventories | 22,805 | 25,719 | 24,886 | ||
Other current assets | 1,887 | 1,768 | 1,511 | ||
Total current assets | 30,682 | 33,681 | 32,471 | ||
Net property and equipment | 25,735 | 25,240 | 25,631 | ||
Operating lease right-of-use assets | 7,071 | 6,523 | 6,941 | ||
Goodwill | 7,937 | 7,434 | 7,444 | ||
Other assets | 4,152 | 3,988 | 3,958 | ||
Total assets | $ 75,577 | $ 76,866 | $ 76,445 | ||
Liabilities and Stockholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | $ 11,478 | $ 12,402 | $ 11,443 | ||
Accrued salaries and related expenses | 2,034 | 1,934 | 1,991 | ||
Current installments of long-term debt | 1,362 | 1,224 | 1,231 | ||
Current operating lease liabilities | 1,026 | 942 | 945 | ||
Other current liabilities | 7,672 | 7,778 | 7,500 | ||
Total current liabilities | 23,572 | 24,280 | 23,110 | ||
Long-term debt, excluding current installments | 40,567 | 41,740 | 41,962 | ||
Long-term operating lease liabilities | 6,300 | 5,807 | 6,226 | ||
Other long-term liabilities | 3,708 | 3,741 | 3,585 | ||
Total liabilities | 74,147 | 75,568 | 74,883 | ||
Total stockholders' equity | 1,430 | 1,298 | 1,562 | ||
Total liabilities and stockholders' equity | $ 75,577 | $ 76,866 | $ 76,445 | ||
THE HOME DEPOT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||
Nine Months Ended | |||
in millions | October 29, | October 30, | |
Cash Flows from Operating Activities: | |||
Net earnings | $ 12,342 | $ 13,743 | |
Reconciliation of net earnings to net cash provided by operating activities: | |||
Depreciation and amortization | 2,415 | 2,216 | |
Stock-based compensation expense | 300 | 286 | |
Changes in working capital | 1,391 | (6,579) | |
Changes in deferred income taxes | (310) | 129 | |
Other operating activities | 301 | 226 | |
Net cash provided by operating activities | 16,439 | 10,021 | |
Cash Flows from Investing Activities: | |||
Capital expenditures | (2,368) | (2,216) | |
Payments for businesses acquired, net | (795) | — | |
Other investing activities | 15 | (29) | |
Net cash used in investing activities | (3,148) | (2,245) | |
Cash Flows from Financing Activities: | |||
Repayments of short-term debt, net | — | (1,035) | |
Proceeds from long-term debt, net of discounts | — | 6,942 | |
Repayments of long-term debt | (1,200) | (2,423) | |
Repurchases of common stock | (6,465) | (5,136) | |
Proceeds from sales of common stock | 192 | 146 | |
Cash dividends | (6,304) | (5,856) | |
Other financing activities | (146) | (185) | |
Net cash used in financing activities | (13,923) | (7,547) | |
Change in cash and cash equivalents | (632) | 229 | |
Effect of exchange rate changes on cash and cash equivalents | (67) | (110) | |
Cash and cash equivalents at beginning of period | 2,757 | 2,343 | |
Cash and cash equivalents at end of period | $ 2,058 | $ 2,462 | |
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SOURCE The Home Depot
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