General view of a Home Depot store in Midtown Manhattan on February 26, 2025 in New York City.
Eduardo Munoz Alvarez | Corbis News | Getty Images
Home Depot stuck by its full-year outlook on Tuesday, even as the company came in slightly shy of Wall Street’s expectations for quarterly earnings and revenue.
The home improvement retailer reiterated that it expects full-year total sales to grow by 2.8% and comparable sales, which take out the impact of one-time factors like store openings and calendar differences, to rise about 1%.
However, it missed Wall Street’s earnings expectations for the second straight quarter.
Shares of Home Depot rose about 4% in early trading.
Here’s what Home Depot reported for the fiscal second quarter compared with Wall Street’s estimates, according to a survey of analysts by LSEG:
- Earnings per share: $4.68 adjusted vs. $4.71 expected
- Revenue: $45.28 billion vs. $45.36 billion expected
In the three-month period that ended Aug. 3, Home Depot’s net income was $4.55 billion, or $4.58 per share, down slightly from $4.56 billion, or $4.60 per share, in the year-ago period. Revenue rose almost 5% from $43.18 billion in the year-ago period. Adjusting for one-time items, including related to the value of intangible assets, Home Depot reported earnings of $4.68 per share.
The report is Home Depot’s first since May 2014 to fall short on both earnings and revenue expectations.
Home Depot’s results reflect that the company is still waiting for a greater pickup in home improvement activity, whether spurred on by higher housing turnover, lower mortgage rates or consumers’ own shift in mentality.
In an interview with CNBC, Chief Financial Officer Richard McPhail said the company continues to see the effects of a “deferral mindset” from homeowners, which began in roughly mid-2023.
Still, McPhail said, there are encouraging signs in the retailer’s business: Big-ticket transactions, which the company defines as over $1,000, rose 2.6% compared with the year-ago quarter. Twelve of its 16 merchandising departments posted year-over-year sales gains. And year-over-year sales trends improved in each month of the quarter, with comparable sales up 0.3% in May, 0.5% in June and 3.3% in July, he said.
“We absolutely saw momentum continue to build in our core categories throughout the quarter,” he said.
McPhail said Home Depot’s fiscal 2025 outlook does not factor in potential rate cuts by the Federal Reserve, which could spur borrowing for homebuying and bigger projects.
“We don’t embed any point of view on the rate environment changing, nor on the demand for large projects changing,” he said.
On the company’s earnings call, CEO Ted Decker said “some relief on mortgage rates, in particular, could help.” But he added that’s not the only factor on consumers’ minds when Home Depot surveys its customers and pros.
“The No. 1 reason for deferring the large project is general economic uncertainty,” he said. “That, you know, is larger than prices of projects, of labor availability, all the various things we’ve talked about in the past by a wide margin.”
Betting on the pros
As the real estate market remains sluggish and borrowing costs remain high, Home Depot has looked beyond the homeowners who come to its stores to buy kitchen appliances, cans of paint or other supplies for do-it-yourself projects. Home Depot acquired SRS Distribution, a company that sells supplies to roofing, landscaping and pool professionals, for $18.25 billion last year. It announced in June that it was buying GMS, a specialty building products distributor, for about $4.3 billion. The GMS deal is expected to close by the end of Home Depot’s fiscal year in late January, according to Home Depot.
McPhail said about 55% of Home Depot’s sales come from pros and about 45% comes from do-it-yourself customers, when including SRS.
Comparable sales increased 1% across the business and 1.4% in the U.S. during the fiscal second quarter. Home Depot said foreign exchange rates negatively impacted the company’s comparable sales by about 0.4%.
That comparable sales growth marks only the second quarter out of the last 11 that Home Depot has reported year-over-year improvement — marking its strongest performance in more than two years.
For the fiscal second quarter, McPhail said year-over-year sales on both the pro side and DIY side of the business grew. He declined to share percentage increases, but said those increases were “relatively in line with one another.”
Home Depot saw strength in categories that tend to be popular with pros, such as lumber, concrete and decking, said Billy Bastek, executive vice president of merchandising, on the company’s earnings call. On the do-it-yourself side of the business, seasonal products like grills and live goods from the gardening category did well, he said.
Online sales rose about 12% from the year-ago quarter, Bastek said. He attributed some of that to the company’s faster delivery speeds.
Tariffs have added uncertainty to the outlook for retailers, though. McPhail told CNBC in May that Home Depot did not plan to hike prices across its store, even as other retailers, including Walmart, warned that tariff-related costs would be too much to absorb.
Since May, however, U.S. tariff policies have changed. Higher tariffs began in early August on dozens of U.S. trading partners. Other major agreements remain in flux. President Donald Trump last week delayed higher U.S. tariffs on Chinese goods for another 90 days as negotiations continue.
McPhail told CNBC that Home Depot hasn’t changed its pricing approach. And, he said, most of its imported products sold in the quarter landed ahead of tariffs.
Home Depot’s customer base tends to be on stronger financial footing than U.S. consumers overall, which could help the company weather sustained higher costs. About 90% of its do-it-yourself customers own their own homes and the home pros who shop with Home Depot tend to get hired by homeowners.
Customer transactions across Home Depot’s website and stores fell in the quarter to 446.8 million compared with the 451 million in the year-ago period. Yet shoppers spent slightly more during those transactions, with the average ticket rising to $90.01 from an average ticket of $88.90 in the year-ago period. Those metrics exclude results from acquisitions SRS and HD Supply, the company said.
Home Depot’s shares ended Monday at $394.70. As of Monday’s close, the company’s shares are up roughly 1.5% so far this year. That trails the nearly 10% gain of the S&P 500 during the same period.
– CNBC’s Robert Hum contributed to this report.
