Home Depot Begs J-Pow for Bailout After First Double Miss Since 2014 (Doers Didn’t Do Sh*t)

“And so it begins…”

The Big Box Rumble is officially underway, and Home Depot stepped into the ring and got put away faster than Ben Askren in that Jorge Masvidal fight back in 2019. “It’s nothing personal, it’s just business.”

This morning, the orange-aproned giant posted earnings, and let’s just say the “doers” aren’t exactly getting stuff done. For the second quarter in a row, Home Depot missed Wall Street’s expectations. Revenue came in at $45.28 billion versus the $45.36B analysts wanted, and EPS landed at $4.68 (a whole four cents shy of consensus). That might not sound like the end of the world, but this is the first time since 2014 that Home Depot whiffed on both earnings and revenue in the same quarter. That’s like Steph Curry missing two free throws back-to-back… it just doesn’t happen.

According to CFO Richard McPhail, homeowners have a case of “deferral mindset.” Which roughly translates to: nobody’s touching big-ticket projects until Jerome Powell finally blesses us with a rate cut.

Jim Cramer (yes, the stock market’s favorite reverse indicator) even warned that Home Depot is handcuffed to JPow. I mean it makes sense, do we react expect homeowners to renovate bathrooms with cash? Nobody’s shelling out $25k to redo a kitchen when their 7% mortgage already feels like a second car payment. And while the Fed is still giving an 80% chance of a September cut, that obviously didn’t help Q2.

Now obviously having a “we haven’t had something this bad since 2014” on your report card isn’t great. But if you get away from some of the bullet points, it wasn’t all bad. Same-store sales finally grew again… up 1.0% overall and 1.4% in the U.S. That marks three straight quarters of positive comps stateside, something HD hasn’t pulled off since 2022. Big-ticket purchases (over $1,000) rose 2.6%, and 12 of 16 merchandising categories actually posted gains. Average ticket size also crept up to $90.01 (from $88.90 last year). So while fewer people showed up (transactions dipped to 446.8M from 451M) the ones who did apparently bought more than just one pack of nails and a Snickers at checkout.

(Source: MarketWatch)

CEO Ted Decker, doing his best “nothing to see here” routine, called the results “in line” with expectations. Technically true if by “in line” you mean “just south of the line.”

Home Depot’s real lifeline right now isn’t weekend warriors wandering the aisles for an hour before buying the wrong drill bit. It’s the professionals. With housing turnover stuck in quicksand, HD has doubled down on the contractor crowd. Last year it dropped $18.25B on SRS Distribution (roofing, landscaping, pool supplies), and just this June, it agreed to buy GMS for $4.3B. Add that to the fact that 55% of sales already come from pros, and you see where the strategy is headed. You have to give them some credit for the pivot. If regular homeowners keep “deferring” projects until rates ease, HD wants to make sure it’s still cashing in by selling shingles and drywall to the guys doing the jobs anyway.

Right now, shares are only down 1% on the news, which feels like Wall Street saying, “meh, could’ve been worse.” Don’t forget, HD is still up 10% over the past month because everyone’s front-running Jerome Powell like he’s about to drop rate cuts like DJ Khaled. Meanwhile, Lowe’s has been doing even better (+15%), but let’s not crown them yet… they could walk into earnings and get Masvidal’d in five seconds flat.

As for Home Depot, they’re sticking to the script: 2.8% sales growth, 1% comps. Cool. Translation: “please clap.” But the damage has been done. HD just snapped a 10-year streak of clean earnings. That’s like McDonald’s running out of fries… technically survivable, but you can’t unsee it.

Sure, comps are inching up, pros are still swiping corporate cards, and big-ticket sales are holding the line. But none of that matters unless JPow decides to let the money printer go BRRRRRR.

Until then, the Big Box Rumble scorecard reads: Wall Street 1, Home Depot 0. Next up: Walmart (Thursday), Target (Wednesday), and Lowe’s (Wednesday) enter the ring.

At the time of publishing this article, Stocks.News holds positions in McDonald’s as mentioned in the article.