What risks should traders watch in HD's upcoming earnings?

Here are some risks that traders should watch in Home Depot's (HD) upcoming earnings report:

1. **Macroeconomic Headwinds**: Home Depot's performance is vulnerable to macroeconomic headwinds, particularly higher interest rates and inflation, which can negatively impact consumer spending on discretionary items like home improvement. Any signs of sustained macroeconomic weakness could affect HD's sales and margins.
2. **Softness in Discretionary Projects**: The company has mentioned that certain discretionary projects, such as larger renovations, have been soft due to higher interest rates and economic uncertainty. Traders should monitor any updates on the timing or pace of recovery in these projects, as they can significantly impact quarterly performance.
3. **Competition and Shift in Consumer Behavior**: Increased competition and a shift in consumer behavior towards online retailers or dollar stores could affect HD's market share and pricing power. Any significant changes in the competitive landscape or consumer preferences could impact earnings.
4. **Supply Chain Disruptions**: Although HD has made progress in addressing supply chain disruptions, any further impacts from global supply chain issues could affect the company's ability to meet demand and maintain profitability. Traders should monitor any updates on HD's supply chain health and any additional costs associated with managing supply chain disruptions.
5. **Digital Sales Growth**: On the positive side, traders should watch for updates on HD's digital sales growth, which has been increasing by 4% year-over-year. Strong digital sales performance could help offset some of the weaknesses in the core retail business.

In summary, traders should be mindful of macroeconomic risks, softness in discretionary projects, competition, supply chain disruptions, and digital sales growth when assessing Home Depot's upcoming earnings report.