Home Depot, a big store that sells things for your home, shared that they made more money than people thought in a recent period of time. However, they are warning that they might not make as much money this year because people might not want to spend as much money on their homes. They are trying to get more money by selling things to professionals like builders and roofers, instead of people who are just fixing up their homes. Read from source...

In "Home Depot Sends A Clear Consumer Health Warning," an external contributor seems to suggest that Home Depot's lowered annual profit expectations and forecasted decline in comparable sales might be related to the current weak consumer sentiment and spending. However, the author does not present any direct evidence or factual information to establish this correlation. Moreover, the title "Consumer Health Warning" appears to be misleading since the content is not primarily focused on consumer health. Instead, it seems to merely imply that the retail sector, specifically Home Depot, may be affected by poor consumer sentiment and spending behavior. There is a lack of balance in the report, as the article mostly discusses Home Depot's negative sales figures without providing any counterarguments or alternative perspectives. Additionally, the article's emphasis on consumer health appears to be a stretch and may be considered sensationalized or agenda-driven.

Negative

Reasons: Home Depot has warned its annual profit is expected to decline, also expecting a bigger drop in its annual comparable sales. Weak discretionary spending diminished expectations of consumer sentiment recovering during the remainder of the year. For the 13th straight quarter, Home Depot has been struggling with falling traffic that is reflected in declining customer transactions.

Home Depot Inc (HD) has topped Wall Street estimates with its fiscal second-quarter earnings and sales. Revenue rose slightly to $43.18 billion, and net income was $4.56 billion, or $4.60 per share. However, the company has warned its annual profit is expected to decline due to weak discretionary spending and a cautious consumer. Home Depot expects annual comparable sales to drop between 3% and 4%, YoY compared with its prior view of nearly a 1% decline, while guiding for diluted profit per share to drop between 2% and 4%. Investors should closely monitor reports from Walmart and Target for further insights into consumer health. Home Depot is also offsetting weak demand from DIY customers by building its business for professional builders, roofers, landscapers, and pool contractors. The SRS investment is expected to add about $6.4 billion to its full-year sales, with revenue expected to grow between 2.5% and 3.5%. However, excluding sales from SRS, the new full-year forecast would be a revenue cut. Overall, Home Depot's current outlook signals potential risks for investors.

### Risk Factors:

- Weak discretionary spending
- Diminished expectations of consumer sentiment recovering during the remainder of the year
- Steep inflation and higher borrowing costs affecting consumer behavior
- Home Depot's seventh consecutive quarter of negative comparable sales
- The company's efforts to offset weak demand from DIY customers by focusing on professional builders, roofers, landscapers, and pool contractors may not be sufficient
- The completion of the SRS Distribution deal might not bring the expected boost to annual sales
- Home Depot's annual comparable sales are expected to drop more than previously anticipated
- The decline in diluted profit per share could be higher than anticipated

### Recommended Actions:

- Thoroughly review Home Depot's annual profit expectation and annual comparable sales guidance
- Monitor reports from Walmart and Target for further consumer health insights
- Assess the effectiveness of Home Depot's strategy to offset weak demand from DIY customers
- Investigate the potential benefits and risks associated with the SRS Distribution deal
- Consider diversifying investment portfolio to reduce reliance on HD's performance

### DISCLOSURE:

This content is for informational purposes only. It is not intended as investing advice.