Home Depot CFO: We don't see a recession
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Home Depot doesn’t see the U.S. economy falling off a cliff soon — aka that ugly recession that is dominating the talk right now on Wall Street.
“We don’t see it,” longtime Home Depot Chief Financial Officer Carol Tomé told Yahoo Finance. Tomé, who is retiring soon after a very successful run at Home Depot that began in 1995, said consumers continue to shop for big ticket items and sales across U.S. geographies remain solid. If the U.S. was in a recession — or nearing one — Home Depot (HD) would unlikely be seeing these types of trends.
Moreover, Tomé noted that as weather conditions improved throughout the second quarter consumers returned. Same-store sales at U.S. stores accelerated as the quarter progressed.
“The consumer is healthy,” Tomé added.
Mr. Market seems to agree with Tomé’s appraisal.
Home Depot’s stock popped 5% on Tuesday despite a mixed second-quarter and cut to full-year sales guidance. U.S. same-store sales rose 3.1% in the quarter, slightly missing Wall Street analyst estimates. Earnings of $3.17 a share did blow by projections for $3.05 a share.
In large part due to worries on how consumers will respond to tariff-related price hikes later this year, Home Depot cut its full-year same-store sales estimates to 4% from 5%. Home Depot left its earnings guidance unchanged.
Tomé said there is a dose of “conservatism” baked into the revised sales outlook owing to uncertainty on consumer spending.
“More important, in our view, are new product introductions driving ticket growth and outperformance across coastal housing markets. These observations suggest to us that the consumer and R&R appetite remains healthy despite a fluid geopolitical backdrop,” wrote Jefferies analyst Jonathan Matuszewski.
Brian Sozzi is an editor-at-large and co-host of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi
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