Home Depot on Tuesday posted a roughly 4% quarterly sales decline, as a sluggish real estate market and selective spending by homeowners continued to weigh on home improvement demand.
The company also stuck by the current fiscal year forecast that it shared in December at an investor day. It said it expects full-year total sales growth to range between about 2.5% and 4.5% and adjusted earnings per share to be between roughly flat and up 4% from $14.69 in the prior fiscal year. It expects full-year comparable sales growth, which takes out one-time factors like store openings and closures, to range from flat to up 2%.
Despite the fiscal fourth-quarter sales decline, Home Depot topped Wall Street’s revenue and earnings expectations for that period.
In an interview with CNBC, Chief Financial Officer Richard McPhail said U.S. consumers and the company have “been in a frozen housing environment for three years” – and there hasn’t been a meaningful thaw.
“What we’ve seen as an added pressure during the last year has been this increase in consumer uncertainty, a gradual decline in consumer confidence,” he said. “And so those are signs we’re watching.”
He said customers have told the company that they are concerned about housing affordability and job losses, dynamics that colored Home Depot’s outlook for the year.
Here’s what Home Depot reported for the fiscal fourth quarter of 2025 compared with Wall Street’s estimates, according to a survey of analysts by LSEG:
- Earnings per share: $2.72 adjusted vs. $2.54 expected
- Revenue: $38.20 billion vs. $38.12 billion expected
Shares of Home Depot rose about 2% on Tuesday, as the company beat earnings expectations after missing estimates three quarters in a row. Its stock closed at $384.48, bringing its market cap to $382.75 billion.
Higher interest rates, lower housing turnover and economic uncertainty have challenged the company, as homeowners delay the pricier projects typically spurred by buying or selling a home.
In the three-month period that ended Feb. 1, Home Depot’s net income fell to $2.57 billion, or $2.58 per share, from $3.0 billion, or $3.02 per share, in the year-ago period. Excluding accounting-related expenses related to the value of SRS Distribution and its subsidiaries, Home Depot posted adjusted earnings per share of $2.72.
Revenue dropped from $39.70 billion in the year-ago period. The company said some decline was due to the most recent fiscal year 2025 having one fewer week. The additional week in the 2024 fiscal year contributed $2.5 billion in sales.
As the Atlanta-based retailer waits for business to pick up, it laid off 800 employees and announced a five-day a week return-to-office policy in late January.
Yet some investors anticipate an inflection point could be coming for Home Depot, as mortgage rates moderate slightly. The average rate on a 30-year fixed mortgage fell to 5.99% on Monday, matching its lowest level since 2022, according to Mortgage News Daily.
Home Depot’s biggest selling season, springtime, is also ahead.
McPhail said Home Depot’s business was relatively stable throughout the year, including in the fourth quarter, when adjusting for storms. He said the company is gaining market share, even as the sector lags.
Comparable sales, an industry metric also called same-store sales, increased 0.4% in the fiscal fourth quarter across the business and 0.3% in the U.S.
Store transactions in the quarter across Home Depot’s website and stores dropped by 1.6% year over year, but average ticket rose 2.4% year over year.
Pricing and tariff trends
The growth in average ticket “primarily reflects some price increases,” Billy Bastek, executive vice president of merchandising, said on the company’s earnings call.
McPhail told CNBC that Home Depot has had “modest” price increases, though he declined to say which items and categories now cost customers more.
Half of Home Depot’s 16 merchandising departments posted positive comparable sales from the year-ago period, Bastek said. Those were power, electrical, storage, indoor garden, hardware, plumbing, bath and kitchen.
Big-ticket purchases, which the company defines as those over $1,000, were 1.3% higher than the year-ago period, because of customers trading up for new and innovative items and buying higher-priced products, Bastek said.
Even with those pricier purchases, there are signs that some customers are value-conscious. Bastek said some customers are trading down to lower-priced countertops and appliances, though that behavior hasn’t been widespread.
As U.S. consumers put off selling and buying homes, CEO Ted Decker said “there’s maybe a bit more repair than replace.”
“We’re certainly bouncing along what we hope would be a bottom in things like [housing] turnover,” he said.
Higher tariffs have been one of the forces driving price hikes at retailers, including Home Depot. Companies now face a new landscape for import duties after the Supreme Court on Friday ruled that some of the Trump administration’s tariffs were illegal. Soon after the ruling, President Donald Trump said at a news conference that he would pursue alternative tariffs and proposed an across-the-board global tariff that he has since set at 15%.
Decker said Home Depot is “still in the middle of our analysis” after the Supreme Court ruling and latest proposed tariffs.
“Not all the information is out right now. Not all the language is final around what was announced,” he said. He added that Home Depot is “as well positioned as anyone to understand any impacts and manage through them.”
More than half of what Home Depot sells comes from the U.S., according to the company. It’s diversifying its imports, so that no single country outside of the U.S. represents more than 10% of the company’s purchases, McPhail said.
Though do-it-yourself buyers have cut back, the company still has a more stable business segment.
A growing business from home professionals, such as contractors and roofers, has boosted Home Depot’s overall business. It acquired SRS Distribution, a company that sells supplies to roofing, landscaping and pool professionals, for $18.25 billion in 2024 and bought GMS, a specialty building products distributor, for about $4.3 billion last year.
Pro business is strong, but still pressured
Pro sales were stronger than do-it-yourself sales during the fourth quarter, McPhail told CNBC, though he declined to share specific figures.
Even the pro side of the business has been pressured. McPhail said on the company’s earnings call that SRS’ sales declined by a low single-digit percentage in the fourth quarter compared with the year-ago period.
Yet he added the company — which sells supplies to roofers and other pros — fared better than others. He referred to market research data for the industry, which showed that total shipments of shingles fell 28% year over year to the lowest industry volume since 2019.
For the full fiscal year, SRS’ organic sales grew by a low single-digit percentage, despite slower demand in the home improvement industry and a lack of storms, Decker said. He said Home Depot expects the company’s organic sales to increase by a mid-single digit percentage in fiscal 2026.
Home Depot opened 12 stores in fiscal 2025 and plans to open 15 additional stores this fiscal year.
The company also announced on Tuesday that its board of directors increased its quarterly dividend by 1.3%, or 3 cents, to $2.33 per share. It will be payable next month.
Correction: Home Depot acquired SRS Distribution for $18.25 billion in 2024. An earlier version misstated the time element.
Read the original article here