Home Depot’s Q1 earnings send warning signs for US retailers

Home Depot’s weak Q1 earnings send warning signs for other retailers. The revised prediction for Home Depot shows that even more affluent Americans who own homes have started to be frugal with their money. Target and other retailers who report in the upcoming weeks may be worse off due to the fact that most of their customers own homes, which indicates that they have wealth beyond what is in their bank accounts.

Home Depot has an advantage over many other merchants due to the fact that most of its customers own homes, which indicates that they have wealth beyond what is in their bank accounts. Discretionary spending has decreased year over year in the US as a result of people making trade-offs due to the current surge in home purchases and projects.

Even when mortgage rates climb, Home Depot has some sector-specific benefits that may shield them from some of the repercussions of weaker discretionary spending. In the US, housing is in short supply, and as mortgage rates climb, more homeowners are deciding to stay in their homes rather than sell them. Long-term demand is expected to increase, according to homebuilders, as more homes approach their 20th and 40th birthdays.

CEO Ted Decker told analysts during a call held Tuesday to discuss the company’s earnings that business from both its DIY customers and professional contractors in the quarter was less than expected, as consumers continue to take on smaller home improvement projects. In addition, higher interest rates and inflation are taking a toll.