Is home improvement spending due for a comeback? Home improvement chain Home Depot (HD) is certainly preparing for a comeback by streamlining its operations.
Reports noted that Home Depot, currently the largest home improvement retailer, has cut ties with over three million square feet of warehouse space. There was a 1.3 million square foot warehouse in Phoenix, Arizona that was lost, as was a 1.1 million square foot distribution center in California’s Inland Empire region. Another in Metro Atlanta measuring 772,000 square feet was also lost, bringing the cumulative total to about 3.2 million, or around four million since the start of 2024.
Objectively, that is quite a bit of warehouse out of Home Depot’s hands, but that represents just about 4% of its overall warehouse portfolio. The notion of divesting space actually goes back to a plan Home Depot set up back in 2023 to cut costs, starting with paring back its logistics operations.
A Little Too Soon?
While Home Depot is paring back its real estate, it also may be facing a surge in demand. With the Federal Reserve recently cutting interest rates, this may spawn a new wave of interest in home improvement loans. This is particularly true as the overall housing market has been somewhat soft.
Yet while this may not immediately prompt a surge of demand for new fixtures and cabinets, a more immediate need has come to light: the two hurricanes that hit the southeastern United States, Helene, and soon, Milton. Home Depot is already preparing free disaster relief kits, which include trash bags, work gloves, and other items geared toward helping cleanup operations.
Is Home Depot Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on HD stock based on 20 Buys and five Holds assigned in the past three months, as indicated by the graphic below. After a 9.09% rally in its share price over the past year, the average HD price target of $404 per share implies 0.83% downside risk.
