Home Depot struggles with declining sales due to interest rates

Home Depot is feeling the effects of high interest rates as many homeowners hold off on renovation projects. In Las Vegas, day laborers waiting for work outside a Home Depot were unable to find jobs. This reflects a larger trend concerning the company's performance in the US economy. With mortgage rates over 6.5 percent, many homeowners are choosing to stay put rather than moving to new homes. This slowdown in housing turnover means fewer renovations. Data shows existing-home sales fell by 1.2 percent in February compared to a year earlier. During the pandemic, Home Depot saw a surge in sales as people invested in home improvements. However, the company has struggled in the past year, reporting eight consecutive quarters of declining sales. This year, they expect only a 1 percent increase in comparable sales, which is much slower than pre-pandemic growth. Despite these challenges, Home Depot executives believe that an aging housing market and homeowners’ accumulated equity will drive spending. They note that many customers are ready to invest in home improvements despite higher rates. Home Depot plans to grow by adding more locations, expanding its online sales, and targeting professional contractors. These contractors now make up about half of Home Depot’s business. The company aims to make it easier for these customers to do business with them. At a recent convention, Home Depot showcased new products to thousands of store managers, emphasizing the company's competitive culture. However, shares of Home Depot have dropped by 18 percent since December due to concerns about tariffs from the U.S. government. Home Depot's supply chain has diversified in recent years, shifting away from reliance on China. The CEO mentioned that while prices might rise due to tariffs, they aim to maintain value for their customers.