(Reuters) - Home Depot Inc cut its annual sales forecast on Tuesday, as the home improvement market cools after explosive growth during the pandemic, with Americans cutting back on spending on tools and building materials as inflation stays sticky.
Shares of the largest U.S. home improvement chain tumbled nearly 5% in premarket trading after the company also missed first-quarter sales estimates, hurt by adverse weather and falling lumber prices.
Home improvement retailers have now lost their pandemic-era sparkle, as consumers shift focus away from their homes and instead spend on travel, vacations and other services.
"Given the negative impact to first quarter sales from lumber deflation and weather, further softening of demand relative to our expectations, and continued uncertainty regarding consumer demand, we are updating our guidance," said Chief Financial Officer Richard McPhail.
Home Depot now expects comparable sales to decline between 2% and 5% in fiscal 2023, compared to its prior outlook for sales to remain nearly flat.
Analysts were expecting comparable sales to decline 0.9% this year, according to Refinitiv IBES data.
Home Depot said comparable sales for the first quarter decreased 4.5%, compared with analysts' average estimate of a 1.74% drop.
Home Depot stock slid 4.5% after reporting its quarterly results.
