Home Depot's Five-Quarter Slump: A Warning Sign for Investors

Home Depot's customer transactions have fallen for five straight quarters, but the company is offsetting this decline with bigger ticket prices and acquisitions. Comparable customer transactions fell 1.3% in the fiscal first quarter, a fifth consecutive quarterly decline.

The average ticket price rose 2.3% year over year to $92.76. This is a different signal than one soft quarter, as it suggests transactions have stopped growing even as each one rings up more. Bigger receipts can come from higher prices, customers choosing pricier items, or both.

Home Depot's revenue growth isn't coming from more transactions, but from bigger receipts and acquisitions. The company reports its fiscal second-quarter results on August 18. Comparable sales grew just 0.6% last quarter, while total sales grew 4.8%. This is mostly due to the acquisition of SRS Distribution in June 2024.

Management isn't promising a traffic turn this year. Guidance calls for total sales growth of 2.5% to 4.5%, comparable sales growth of roughly flat to 2%, and diluted earnings per share roughly flat to up 4%. The plan still calls for about 15 new store openings this year.