Home Depot stock falls 5% because it botched a website job
Home Depot renovated its website... Looks terrible. The Atlanta-based chain's sales rose 3.6% last quarter — that's less than what investors expected, so shares fell 5%. Plus, Home Depot downgraded its outlook for the rest of the year. Strange, because yesterday we also learned that 1.3M homes began construction in the US last month. That should mean big Home Depot businesses.
Windows, not websites... One big reason for the miss was Home Depot's botched web development renovation (not exactly its specialty).
- 45% of Home Depot's sales come from professional contractors, the other 55% coming from "DIY" customers (like us).
- Since pros know the difference between an Allen and a Phillips head, HD is building them a personalized online shopping experience.
- But like all renovations, this project isn't going well. Investors hoped it would lead to new sales last quarter, but development delays messed with that.
Home Depot's performance is ruled by an 80/20 rule... 80% depends on macro issues it can't control: the housing market, tariffs, and the price of lumber. The other 20% depends on HD's actual performance. Those percentages aren't exact, but you would've expected more from the current situation:
- Home prices are high, so DIY homeowners might splurge on re-flooring that bathroom with fresh marble.
- House construction hit a 12-year high last month, so pro contractors should be busting down HD's doors for fresh 2X4s of timber.
- But HD suffered last quarter because it missed on the part it can control.