Fears of a slowdown in the US housing market are mounting - and Home Depot just slashed its 2020 sales outlook
Scott Olson/Getty Images
Scott Olson/Getty Images
- Home Depot cut its 2020 sales forecast on Wednesday amid fears that the US housing market is poised for weakness in the year ahead.
- Shares of the home-improvement chain slipped 2% in early trading.
- Home Depot has struggled to boost sales and has cut its yearly outlook twice in 2019, citing uncertainty ahead and the timing of certain strategic investments.
- Watch Home Depot trade live on Markets Insider.
Home Depot isn't betting on a housing boom in 2020.The home-improvement chain on Wednesday cut its sales forecast for 2020, signaling to investors that there could be weakness in the housing market ahead. Shares fell 2% in early trading Wednesday.
The disappointing 2020 forecast comes amid reports that the housing market is poised to slow in 2020. Next year could see home price growth will flatten, inventory will remain constrained, and mortgage rates will increase, all weighing on sales, according to Realtor.com's national forecast.It also comes at the end of a tough year for the retailer. Home Depot had a dismal earnings report in November that sent shares tumbling as much as 7.5% on weak earnings and a cut 2019 forecast.
The November earnings release was the second time this year Home Depot has cut its year-end outlook, citing issues such as the timing of benefits associated with One Home Depot strategic investments, continued lumber-price deflation, and the potential impact of tariffs.It's also facing increased competition from Lowe's, which reported an earnings beat and boosted its 2019 forecast in November, CNBC reported. The better-than-expected results show that Lowe's CEO Marvin Ellison has been successful in turning the business around since taking the top job in 2018. Home Depot also said that in 2020, comparable sales will fall in a range of 3.5% and 4%. It also forecast operating margin of roughly 14%, below its earlier targets. The company reaffirmed its sales and profit forecast for year-end 2019.
Home Depot is up roughly 26% year to date through Tuesday's close.
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