Home Depot reported quarterly sales Tuesday that fell in need of Wall Street expectations as buyers postponed major discretionary projects reminiscent of bathroom and kitchen renovations on account of higher rates of interest and made spring purchases late.

Nevertheless, the hardware retailer reiterated its forecast for the total yr, which incorporates an extra week in comparison with the previous yr. The Company expects total revenue to extend roughly 1% in fiscal 2024 including these additional days. However, the retailer said it expects comparable sales, which exclude the impact of store openings and closings, to say no about 1% when excluding that extra week.

In an interview with CNBC, Chief Financial Officer Richard McPhail said customers were in a holding pattern that began within the second half of last yr as they responded to rising mortgage rates. He said the corporate expects these trends to proceed.

“The hardware store customer is extremely healthy from a financial perspective,” he said. “So it’s not that we don’t have the ability to spend money. What they're telling us is that they're just putting these projects off because of higher rates, it just doesn't seem like the right time to do it.”

Here's what the company reported for the three-month period ended April 28 compared to Wall Street expectations based on an analyst survey by LSEG:

• Earnings per share: $3.63 versus expected $3.60

• Revenue: $36.42 billion versus expected $36.66 billion

Net income for the fiscal first quarter fell to $3.6 billion, or $3.63 per share, from $3.87 billion, or $3.82 per share, in the year-earlier period. Net sales fell 2.3% to $37.26 billion.

Comparable sales fell 2.8% companywide and 3.2% in the U.S. in the fiscal first quarter

Home Depot has struggled with a tougher homebuilding situation, which has dampened demand for do-it-yourself projects. About half of Home Depot's sales come from DIY customers and the other half come from professionals such as roofers and landscapers.

As interest rates remain high, consumers are hesitant to move out of their homes and into new ones – a fluctuation that often inspires home ownership projects. Higher interest rates have also reduced the desire for larger projects that may require financing. In recent quarters, Home Depot has seen customers purchasing less expensive items and tackling smaller projects – a trend that continued into the last quarter.

In the fiscal first quarter, customers visited Home Depot's stores and website less frequently and tended to spend less. Customer transactions fell 1% to 386.8 million and the average ticket fell 1.3% to $90.68.

After more than two years of explosive demand during the Covid pandemic, Home Depot saw sales decline. The company posted its worst sales decline in nearly two decades and cut its forecast in the first quarter of last year. Home Depot's sales totaled $152.7 billion in the fiscal year that ended in January, down 3% from a year ago.

Inflation could also play a role in this decline, as consumers spend more money on essentials and have to compromise on how they spend their disposable income.

However, McPhail said Home Depot isn't seeing customers switching to cheaper items like less expensive power tools or appliances. He attributed the company's weaker sales in large part to consumers' “postponement mentality” and a dramatically slowing real estate market.

“When mortgage rates have fallen slightly, as we saw earlier this quarter, housing sales appear to respond quickly and significantly in a positive direction,” he said. “So we believe this is an indicator that there is a huge pent-up demand in household formation and housing turnover, as well as the larger projects associated with housing turnover.”

The weather also put pressure on sales within the last quarter, he said. Spring is the largest selling season for home improvement retailers, including Home Depot. Still, customers delayed outdoor purchases on account of colder and wetter weather in lots of parts of the country, he said.

These spring purchases have begun to extend because the weather improves, he said.

To compensate for slower sales, the house improvement retailer has sharpened its technique to attract professionals, as they have an inclination to buy larger quantities and supply a more stable income. Home Depot has a growing network of distribution centers across the country that may store and deliver roofing shingles, insulation and other materials on to job sites. In late March, the corporate announced it will acquire SRS Distribution, a Texas-based specialty distributor of roofing, landscaping and pool supplies, for $18.25 billion – the most important acquisition in the corporate's history.

McPhail said the deal continues to be on target to shut this fiscal yr, which ends in early February.

In addition to wooing professionals, Home Depot is attempting to drive growth by opening a couple of dozen latest stores this fiscal yr and adding features to enhance its online and in-store experience.

McPhail said some business dynamics have improved, although sales have weakened. He said home The depot branches are fully staffed and have the most effective inventory in years. Transport costs have fallen. While organized retail crime continues to be a challenge for the industry, he said Home Depot's shrinkage, a term that refers to lost, stolen or damaged items, has also declined yr over yr.

Home Depot has also added technology to make sure items are on shelves when customers need them. For example, it uses computer vision to make sure products on the market are damage-free and to forestall theft when customers use self-checkout, said Ann-Marie Campbell, senior executive vice chairman who oversees U.S. stores and operations supervised, on the corporate's website results call.

Shares of Home Depot closed at $340.96 on Monday. So far this yr, Home Depot shares are down about 2%, while the S&P 500 has gained about 9%.