Home Depot () repo🌳rted better-than-expected third-quarter earnings even as consumer demand was weakened by high inflation and interest rates, leading to a decline in sales.

Net income fell rဣoughly 12% compared to the year-ago qua꧙rter to $3.8 billion, or $3.80 per share. Revenue fell by a less-than-expected 3% to $37.7 billion.

Home Depot also refined its guidance for the decline in sales and earnings it expects for the year. It now projects a 3% to 4% revenue decline, versus the sales decline in the range of 2% and 5% over last fiscal it anticipated at the start of this year. Similarly, diluted earnings per share loss expectations are 9% to 11% lower compared to fiscal year 2022, narrower from the 7%-13% range at the end of the first quarter.

This slump could be broadly tied to the series of interest rate hikes by the Federal Reserve, historically a significant headwind꧒ for home improvement companies. Higher rates are often tied with slower home sales, and customers also tend to pause plans for DIY hom😼e projects when costs are elevated, as in periods of rampant inflation.

Home Depot's earnings were also negatively impacted by adverse materials price changes. The company posted a second straight quarter of comparable sales declines as a result of lumber prices.

Shares of Home Depot were 🦩up about 6% in early trading Tuesday but have fallen by about 7% in🎉 the last year.

Correction—Nov. 21, 2023: A previous version of this article mischaracterized the changes Home Depot made to its sales and earnings outlook. The headline and story have been changed to reflect that accurately.