Sherwin-Williams lowered its full-year adjusted profit forecast after missing second-quarter expectations, citing weaker-than-expected demand through June. Shares fell more than 4% in premarket trading on Tuesday as the company cautioned that near-term conditions remain soft. The update comes as new U.S. home sales cool, pressuring paintmakers that rely on construction and renovation activity.
The Cleveland-based company, one of the world’s largest coating suppliers, said it does not see immediate signs of improvement. The statement adds to mounting signs that the housing slowdown and tighter consumer budgets are weighing on do-it-yourself projects and professional repaint work.
Housing Cooldown Hits Paint Demand
Paint sales often track housing cycles. When new home sales drop, purchases of coatings, materials, and supplies tend to fall with them. Builders buy less for new construction, while homeowners delay updates that are not urgent. Recent declines in new home sales have therefore become a key headwind for the sector.
Higher borrowing costs and affordability pressures have curbed buyer interest. Fewer new builds mean fewer interiors and exteriors to coat. Repair and remodel activity has also eased from the pandemic surge, when stay-at-home projects lifted volumes across retail channels.
“Demand was softer than anticipated through June, and we do not see catalysts to change that trajectory at this time, causing us to adjust our full-year guidance downward,” said CEO Heidi Petz.
Missed Quarter Signals Broad-Based Softness
The company’s second-quarter shortfall reflects weakness in both consumer and professional segments, according to management commentary. Large contractors, who typically drive higher-margin sales, have reported fewer starts and project delays. Retail traffic has moderated as households watch spending and prioritize essentials.
Analysts note that coatings tied to new construction are the most exposed. Products used for first coats, exterior finishes, and protective layers face pressure when projects are deferred. Repaint categories usually hold up better, but even those have cooled from peak levels.
- Premarket shares fell over 4% after the outlook cut.
- Soft demand spanned June, with limited near-term catalysts.
- New home sales declines are reducing construction-related coatings demand.
Industry Impact and Competitive Pressures
Competitors across the coatings industry are managing similar forces. Companies with heavier exposure to autos, aerospace, or industrial end markets may see a different mix, but residential remains a large driver for many U.S. paint suppliers. Pricing actions taken over the last two years to offset higher raw material and labor costs are now meeting resistance as volumes slip.
Input costs have eased from recent peaks, yet not enough to offset the volume decline. Retail promotions are reappearing in some channels to keep shelves moving, which can pressure margins. Distributors and dealers are also watching inventory levels closely to avoid excess stock if demand remains weak.
What the Guidance Shift Signals
The reduced profit forecast implies management expects soft conditions to persist through the second half. It also suggests a more conservative stance on construction activity, remodel projects, and professional backlogs. The company emphasized discipline on costs, inventory, and capital spending to protect cash flow.
Investors often track three signposts for a turn: stabilization in new home sales, improving contractor pipelines, and stronger foot traffic in retail paint aisles. None look decisive yet. Seasonal repainting in late summer could offer a lift, but the company does not see it as a major swing factor.
Outlook: Watching Housing and Consumer Health
Management’s tone points to a slow grind rather than a quick rebound. If mortgage rates ease and builders restart projects, coatings demand could recover. A steadier job market and cooling inflation would also support discretionary home upgrades.
For now, Sherwin-Williams is signaling caution. The focus appears to be on protecting margins where possible, aligning production with orders, and preserving service levels for professional customers. Any improvement in housing data or contractor schedules will be watched closely by investors and suppliers alike.
Sherwin-Williams’ cut to its outlook underscores how housing and consumer pressures are filtering into industrial supply chains. The next checkpoints will be monthly home sales reports and commentary from builders and contractors. A firmer housing pipeline would likely be the first sign that paint demand is starting to brighten.
