One of America's largest hardware store chains is bracing for the impact of the ongoing trade showdown between the United States and China.
Home Depot has cut its sales expectations for this year because of the lower cost of lumber and in preparation for a likely round of tariffs against Chinese goods, The Associated Press reported.
"We are encouraged by the momentum we are seeing from our strategic investments and believe that the current health of the U.S. consumer and a stable housing environment continue to support our business," a prepared statement from Home Depot CEO Craig Menear said. "That being said, lumber prices have declined significantly compared to last year, which impacts our sales growth. As a result, today we are updating our sales guidance to account primarily for continued lumber price deflation, as well as potential impacts to the U.S. consumer arising from recently announced tariffs."
The company now expects to see 2.3 percent sales increases instead of a previously-expected 3.3 percent increase. The lower lumber costs have been falling because home construction has been lagging due to drops in home construction, which has been falling for the last few months and fell 4 percent in July.
Last week, the Trump administration announced that the latest round of tariffs against Chinese goods — which are being used to put pressure on the Asian country amid ongoing trade negotiations — would be delayed to give businesses more time to stock up for the back-to-school and holiday shopping seasons. The 10 percent tax would have gone into effect on Sept 1 and affected $300 billion in Chinese goods.
Nevertheless, the company still came out ahead of profit expectations for the second quarter, the AP story says.
Last week, Home Deport Chief Financial Offer Carol Tome told the Atlanta Journal-Constitution that the company expects the next round of tariffs to add $300 million to the cost of its retail inventory. But that's out of $100 billion in sales, Tome added, "which is a manageable number."
Home Depot came under fire from the left and was even the subject of boycott efforts after company co-founder Bernie Marcus announced that he would donate a chunk of his fortune to President Donald Trump's reelection efforts.
Earlier this year, Marcus also pushed back against the spread of socialism, which he said "robs people of their independence, their dignity, and their finances leading to government dependence, suppression of ideas, and lower standards of living for those under its thumb."
Bernie Marcus from Job Creators Network on Socialism www.youtube.com