HP reported that its sales YoY dropped by 18.8% in the first quarter of the fiscal year amid more cautious consumer and business spending.
"I think the decline in sales is really driven by the situation we're seeing in the macro-driven market," said HP CEO Enrique Lores.
Regardless of slumping sales, the company surpassed analysts' earnings forecasts, with net sales totaling $13.8 billion as compared to the $14.15 billion projected.
Sales of personal systems amounted to $9.2 billion against the anticipated $9.65 billion. Printing sales hit the $4.6 billion mark against the forecasted $4.49 billion. Diluted earnings per share (EPS) are $0.75 against the anticipated $0.74. Meanwhile, the shares of HP rose about 2% after hours.
Against the backdrop of weak final results, operating profit margins dropped 240 basis points in the segment of HP's personal systems, whereas in the printing segment margins went up 80 basis points.
Lores claimed that HP was already starting to notice an increase in its margins owing to a number of cost-cutting measures such as large-scale layoffs in late 2022, among other things.
The company took a cautious approach to the new financial year following a quarter that turned out to be pretty challenging as far as sales go.
In the second fiscal quarter, HP is expecting earnings per share to be between $0.73 and $0.83. Based on analysts' estimates, the EPS may total $0.76 per share for the current quarter.
The company expects annual earnings between $3.20 and $3.60 per share, confirming its earlier forecast. As estimated by Wall Street, full-year earnings are $3.29 per share.
“We expect the second half of the year to be stronger than the first,” Lores mentioned.
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