Jim Cramer: Home Depot's miss shouldn't surprise anyone — it could be much worse

Published Tue, May 16 20235:04 PM EDT

Retail is only disappointing if you say it is disappointing. I can't tell you how many times Home Depot (HD) has warned investors that things could be tough out there. So when things actually are tough, you can't stand slack-jawed and say: "What the hey?" The home improvement retailer on Tuesday reported the biggest revenue miss in more than 20 years, posting $37.26 billion for its fiscal-first quarter while analysts forecasted by Refinitiv expected $38.28 billion. It also lowered its guidance for the rest of the year as consumers spend less on pricier products and DIY projects. Now when a company's management says it is disappointed in its performance, that's plenty worrisome. But when executives endlessly stress the inclement weather in one-fifth of the country and erratic lumber prices everywhere, you begin to realize that Home Depot could have had a much weaker quarter. That's why Home Depot's stock didn't collapse today, which shares dipping just 2% and remaining flat in the after market. That plus the 3% yield and the terrific balance sheet. Home Depot is being afflicted by the same thing that is driving every retailer into distress. The Federal Reserve wants moderation in home improvement and it wants spending to come down to curb inflation — and it's winning. We can sit here and criticize Home Depot or we can recognize that between people are not moving because they locked in low-mortgage loans. They also have less need to spruce up a house because it was already spruced up during the pandemic lockdowns. This should be a horrendous time for Home Depot, with no customers at all. Is the anything to do here? I don't think so. A decent yield with just okay times ahead, and the need for better weather in California and stable lumber costs. Nothing to do. Suffice it to say that it might have been Home Depot's worse "miss" in twenty years, but the company will be back when all the appliances and spare rooms need to be refreshed. Until then, it will not merit even a mention on our monthly Club meeting on Wednesday at noon . (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A Home Depot store in Hyattsville, Maryland, on February 22, 2022.

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