On Tuesday, Home Depot reaffirmed its full-year sales forecast, as a key executive stated in an interview with CNBC that the retailer plans to keep its prices stable despite ongoing tariffs. "Due to our scale, the strong partnerships with our suppliers, and the productivity improvements we continue to drive in our business, we intend to generally maintain our current pricing levels across our portfolio," said McPhail, the executive interviewed by CNBC.
McPhail highlighted that more than half of the products sold by Home Depot originate from the U.S. He added that over the past several years, Home Depot and its suppliers have strategically diversified their sources of imports, notably decreasing the percentage of purchases from China. "By this time next year, no single country outside of the U.S. will account for more than 10% of our purchases," he stated.
This pricing strategy stands in stark contrast to that of Walmart, which announced last week that it expects to raise prices as early as late May to offset the higher costs resulting from tariffs. McPhail's statements coincide with Home Depot's first-quarter earnings report, which comes at a time when numerous corporations have either revised or withdrawn their financial guidance due to the rapidly changing tariff landscape introduced by President Donald Trump.
In its latest financial results, Home Depot missed Wall Street's first-quarter earnings expectations for the first time since May 2020 while exceeding sales estimates. The retailer forecasts a total sales growth of 2.8% for the full year, with comparable sales—excluding the effects of temporary factors like store openings—projected to rise by about 1%. This forecast is predicated on the continuation of a U.S. agreement to temporarily lower tariffs to 30% on imports from China and to 10% for many other nations.
According to a survey conducted by LSEG, here’s how Home Depot's fiscal first-quarter results compared to Wall Street estimates:
Earnings per share: $3.56 (adjusted) vs. $3.59 expected Revenue: $39.86 billion vs. $39.32 billion expectedFollowing the announcement, shares of Home Depot saw a nearly 2% increase in premarket trading. For the three-month period ending May 4, the company reported a net income of $3.43 billion, equating to $3.45 per share, compared to $3.60 billion or $3.63 per share during the same period last year. Notably, adjusted earnings per share exclude certain costs, including depreciation from acquired intangible assets.
Spring marks the peak sales season for Home Depot, akin to the "Christmas" period for the home improvement sector, as homeowners and contractors typically undertake more projects in warmer, drier weather. However, the backdrop for Home Depot remains challenging, with many U.S. consumers postponing home purchases and major renovations due to elevated mortgage rates and borrowing costs. Consequently, sales growth has been muted, with comparable sales across the company declining by 0.3% during the fiscal first quarter.
In the U.S., comparable sales rose by a modest 0.2% year over year. This trend has been consistent, except for the previous quarter when Home Depot snapped an eight-quarter streak of falling comparable sales. In the fourth quarter, comparable sales increased by 0.8% across the company. McPhail noted that sales patterns improved as the quarter progressed, with comparable sales declining 3.3% year over year in February, followed by increases of 1.3% in March and 1.8% in April. He attributed the February drop to unfavorable weather conditions.
As Home Depot navigates a more challenging housing environment, the company has intensified its efforts to attract more business from home professionals. Last year, it acquired SRS Distribution, a Texas-based company that supplies materials to roofing, pool, and landscaping professionals, in an $18.25 billion deal. Sales for Home Depot—including SRS—grew approximately 9% year over year in the first quarter, up from $36.42 billion in the previous year. About $2.6 billion of this growth was attributed to SRS's business, alongside contributions from new store openings.
During the fiscal first quarter, customer transactions across Home Depot's website and physical stores rose by 2.1% year over year. The average ticket—indicating the amount spent during store or website visits—was $90.71, slightly above the average from the previous year. Home Depot primarily serves a more affluent consumer segment, with around 80% of its customers being homeowners. McPhail emphasized that the home professionals who purchase from Home Depot are engaging with homeowners who hire them for various projects, ranging from roofing to kitchen remodels.
Despite the positive engagement from customers, McPhail indicated that do-it-yourself customers are increasingly deferring larger projects in favor of smaller, seasonal tasks. Home Depot has received favorable responses to its spring Black Friday event, with strong sales in its appliance, garden, plumbing, and electrical departments. However, sales in higher-ticket categories such as kitchen countertops and baths, which are typically associated with larger renovations, have been softer.
As of Monday's market close, Home Depot's shares have declined by about 2% year to date, lagging behind the S&P 500, which has seen gains of approximately 1% during the same timeframe. The company's shares closed at $379.38 on Monday, bringing its market value to around $377 billion.
This is breaking news, and updates will continue to follow as more information becomes available.
