On Tuesday, The Home Depot Inc (NYSE:HD) fiscal first-quarter earnings that surpassed estimates, while revenue fell short of analyst expectations. Home Depot's latest results confirmed that high interest rates are forcing consumers to postpone major home projects. Its rival, Lowe's Companies Inc (NYSE:LOW) scheduled its earnings call for May 21st. The home improvement rivalry between Lowe's and Home Depot is expected to have intensified amid the consumer pullback.

First Quarter Highlights

During the first three months of the year, Home Depot reported revenue fell 2.3% YoY to $36.42 billion, below LSEG's estimate of $36.66 billion as consumers spent less during their purchases and made fewer visits. Across its business, comparable sales dropped 2.8% while decreasing 3.2% in the U.S. alone. The quarter was also affected by a late start of spring. However, despite the total revenue decline, digital sales grew 3.3% YoY with almost half of those sales being fulfilled through stores.

Customer transactions contracted 1% to 386.8 million and average ticket also fell 1.3% to $90.68.

For the quarter ended on April 28th, net income also dropped to $3.6 billion, or $3.63 per share, but topping LSEG's estimate of $3.60.

Customers have been in a waiting game since the second half of last year.

Despite the revenue miss, Home Depot reaffirmed its full-year guidance as it includes an additional week compared to the previous year. However, when excluding that additional week, comparable sales, which also exclude the impact of store openings and closures, is expected to decline about 1%,

Wooing B2B and C2B customers and enhancing the buying experience for its online and store consumers.

With its acquistion of the materials provider, SRS Distribution, Home Depot showed its focus to build its B2B business which it refers to as Pros that make about one half of its business, with another half being DIY customers. Home Depot is also working on improving the online and physical store experience for its DIY customers. It is also using computer vision to make sure that products are damage-free as well as to prevent theft at self-checkouts.

The home improvement retailer also noted that despite softness in sales, some business dynamics has improved. Overall, the current challenges are merely a reflection of an unfavorable macroeconomy, the same ones affecting Lowe's, as opposed to the company's missteps. Lowe's earnings are also likely to reflect the consumer pullback but Home Depot is likely better at weathering this economic storm.

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