This week, Home Depot announced its biggest revenue hit in over 20 years. As a result, the home improvement retailer has lowered its revenue forecast for this year. Cold weather and declining lumber prices affected Home Depot’s fiscal first-quarter sales. The last time the company experienced a miss this significant was in November 2002.

Consumers delaying large home projects as they head back to the office after working from home during the pandemic contributed to Home Depot’s missed revenue. The number of big-ticket items being sold, like grills and patio sets, has also declined. Home Depot expects sales to decline between 2% to 5% for the fiscal year.

CEO and President Ted Decker said in a release that Home Depot “expected that fiscal 2023 would be a year of moderation for the home improvement market” after experiencing a three-year period of “unprecedented growth.”

 

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“Our sales for the quarter were below our expectations, primarily driven by lumber deflation and unfavorable weather, particularly in our Western division as extreme weather in California disproportionately impacted our results,” Decker said when sharing factors that drove sales lower.

Consumers Putting Large Projects on the Backburner

The company also experienced a decline in demand for flooring, kitchen, and bath. This could mean that consumers are currently focusing on smaller projects.

Home Depot’s CFO Richard McPhail says, “Given the negative impact to first quarter sales from lumber deflation and weather, further softening of demand relative to our expectation, and continued uncertainty regarding consumer demand, we are updating our guidance to reflect a range of potential outcomes.”

Decker told investors on an earnings call that although sales trends were better among do-it-yourself consumers than home professionals, both groups purchased less. Spring and summer months usually see a spike in sales as consumers take on gardening and other projects during the warmer seasons. However, sales are still unpredictable. With the pandemic seemingly over, consumers are spending more money on travel, experiences, and dining than home renovations and appliances.