Home Depot says online investments take longer to pay off, cuts sales goal

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© Reuters. The logo of Down Jones Industrial Average stock market index listed company Home Depot is seen in Encinitas, California© Reuters. The logo of Down Jones Industrial Average stock market index listed company Home Depot is seen in Encinitas, California

(Reuters) – Home Depot Inc (N:) said on Tuesday its efforts to integrate online and in-store shopping were taking longer than expected to pay off, prompting the retailer to cut its 2019 sales forecast and sending its shares down 7% in premarket trade.

To keep customers away from rival Lowe’s Cos Inc (N:), Home Depot invested heavily in its online business, primarily by adding automated lockers in stores for shoppers who want to pick up their orders rather than wait for them to be delivered.

The largest U.S. home improvement chain has also worked on its supply network to shorten delivery times and the search function of its website to make in-demand products more easily accessible.

“We are largely on track with these investments and have seen positive results, but some of the benefits anticipated for fiscal 2019 will take longer to realize than our initial assumptions,” Chief Executive Officer Craig Menear said.

Same-store sales at Home Depot rose 3.6% in the third quarter ended Nov. 3, below expectations of a 4.7% increase, according to IBES data from Refinitiv.

Home Depot said it expected its fiscal 2019 sales to rise about 1.8%, compared to a prior forecast of a 2.3% increase. The company also cut its full year same-store sales forecast.

Home Depot’s weak results also pulled shares of smaller rival Lowe’s down nearly 3% in premarket trading.

Net income fell to $2.77 billion or $2.53 per share in the third quarter from $2.87 billion, or $2.51 per share. Analysts were expecting earnings of $2.52 per share.

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