Home Depot Q1 Earnings Report

As the leading home improvement retailer, The Home Depot’s performance serves as an indicator for broader industry trends and movements within the home improvement sector. The retail giant’s earnings report for the first quarter of 2024 offered a glimpse into the state of home improvement. 

Q1 2024 Sales and Comparable Sales

  • The retailer reported $36.4 billion in sales vs. $36.66 billion estimated, a decrease of 2.3% from Q1 2023.
  • Comparable sales decreased 2.8% – and 3.2% in the U.S. – which are in line with continued economic pressures that are affecting consumer confidence.
  • The Home Depot reaffirmed its guidance of a 1% sales growth for the fiscal year, which includes an additional week vs. 2023. Directly comparable sales are still forecasted to fall 1% under 2023 when removing impact of the additional 2024 week and 12 new stores opening this year.
  • The retailer’s sales continue to temper after more than two years of unparalleled demand and growth during the Covid pandemic.

Key Takeaways for Home Improvement Brands

  • Spring Is Just Getting Started: Spring sprung late for home improvement due to colder and wetter weather, and it’s still going strong. Continue to message products around outdoor projects including lawn and garden, outdoor living and exterior improvement projects. 
  • Embrace the Small: Consumers will continue to respond to content that inspires them to take on smaller projects that add value, comfort and appeal to their home. They are taking on smaller home improvement projects and still deferring big projects like kitchen and bath remodels that may require financing. The Home Depot saw consumers start delaying these big projects in the second half of 2023 due to interest rates, and they expect this to continue. Additionally, consumers are still relocating at a slower rate due to interest rates, and this kind of slowdown typically inspires smaller home projects while consumers stay in place.
  • Build Confidence: Focus messaging on product capabilities and project know-how. DIY customers still account for half of The Home Depot’s business, and these brave, hands-on homeowners still need confidence boosts while they take on even small projects and look for ways to cut project expense. 
  • Quality Still Reigns: Despite the pause on bigger remodeling projects, consumers are still willing to buy quality and are not trading down for affordability in key categories like power tools and appliances. This is an opportunity to message product quality attributes while consumers see the longer-term value in well-built products and make purchase decisions to invest. 
  • Focus on the Pro: Pro project backlogs remain stable even though DIYers are taking on small projects. The residential Pro shops multiple categories across The Home Depot, and Home Depot has invested in dedicated sales teams, Pro-specific digital assets, and a new Pro-returns service where the Pro can initiate a return from the job site, and Home Depot will pick up the product for them, saving them time and money. 
  • In-Store: Half of Home Depot’s online purchases are fulfilled through stores, so foot traffic in stores remains an opportunity to reach customers with strong packaging and meaningful promotions. And although Home Depot’s online business is strong with a 3.3% comp this quarter, they remain committed to the in-store experience. Unlike online-only retailers, their Spring Black Friday event exists to create excitement about getting outside by driving energy and traffic into the stores. 

Product Categories

  • Outdoor Projects: Despite the late spring, consumers will still landscape into the summer and invest in outdoor living and exterior improvement projects. Outdoor garden, paint, lumber, plumbing and hardware category sales were above Home Depot’s company average in Q1. 
  • Building Materials and Power: The power category at Home Depot now includes power tools and outdoor power lawn equipment for interchangeable rechargeable batteries. This category, along with building materials, saw positive sales in Q1. And with a stable commodities environment, Home Depot expects strength in categories impacted by commodity pricing, which is good news for projects involving copper and lumber.
  • Innovation: Smart and energy-saving technologies remain important categories as Home Depot continues to see customers trading up for innovation. Products like smart home devices and connected appliances grow in popularity while delivering convenience and often energy savings.
  • Help Customers Save: In the current economic climate, every dollar counts for the home improvement customer. Continue messaging projects that help them reduce their expenses with water- and energy-saving products and projects.

Key Takeaways for Marketers

  • Invest in Messaging the Essentials: Focus on marketing that promotes fundamental home maintenance, repairs and upgrades that protect the home’s longevity, functionality and comfort.
  • Customize for Pros and DIYers: Craft marketing messages to appeal to the specific needs of both customer groups, even if it means unique and separate marketing campaigns and messages.
  • Collaborate with Local Contractors: Leverage local contractors and existing Pro customers to broaden your brand’s reach and relatability to the Pro customer base.
  • Digital Maturity: A strong digital presence and seamless online/offline integration remains key, especially for DIY brands. A user-friendly website is just table stakes now, and an intuitive mobile app gives you a meaningful edge with convenient and hassle-free product research and project know-how.
  • Omnichannel Marketing: Integrate all marketing efforts, both online and offline, to facilitate easy product research and ensure customers are seeing your messaging in the most relevant places.
  • Personalization and Targeted Messaging: Understanding individual customer needs and preferences through data analysis allows for targeted marketing campaigns with relevant offers and products.
  • Data and Analytics: Your customers’ data is essential to targeting relevant ads, personalizing content and measuring your marketing effectiveness.

Remember, this analysis is based on publicly available information and represents our interpretation of the data. We encourage you to conduct your own research and analysis to develop marketing strategies best-suited for your specific brand and target audience.

At Porchlight, we partner with home improvement brands to develop and implement strategic marketing campaigns that drive results. Contact us today to discuss how we can help your brand navigate the evolving market landscape and achieve its marketing goals.

By providing insights and thought leadership, we empower home improvement brands to make informed decisions and thrive in a dynamic market. So, stay tuned for more industry analysis and marketing tips from Porchlight!

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