Home Depot beats forecasts, keeps full-year outlook

Home Depot said on Tuesday that its core homeowner customer base remains resilient despite higher gas prices and declining consumer confidence, prompting the company to reaffirm its full-year guidance after reporting stronger-than-expected fiscal first-quarter results, News.Az reports, citing CNBC.

Chief Financial Officer Richard McPhail said that homeowners, in many cases, remain financially better positioned than other consumer groups, which has helped sustain customer engagement.

“The homeowner in a relevant sense is perhaps more protected financially than other customer cohorts and so we continue to see engagement,” McPhail said in an interview.

However, he acknowledged that ongoing geopolitical tensions, weakening consumer confidence, and a sluggish housing market are still weighing on spending decisions.

According to McPhail, customers continue to delay spending on larger home improvement projects, a trend the company has seen for several years.

“They continue to tell us that they are going to defer their spend on larger projects,” he said. “That’s consistent with what they’ve told us the last few years.”

Home Depot’s results exceeded Wall Street expectations, according to estimates compiled by LSEG.

The retailer posted adjusted earnings per share of $3.43, slightly above analyst expectations of $3.41. Revenue came in at $41.77 billion, compared with the expected $41.52 billion.

For the three-month period ending May 3, the company reported net income of $3.29 billion, or $3.30 per share, down from $3.43 billion, or $3.45 per share, during the same period a year earlier. Excluding one-time items, including costs linked to certain intangible assets, adjusted earnings reached $3.43 per share.

Sales increased nearly 5% to $41.77 billion from $39.86 billion a year earlier.

The company maintained its fiscal 2026 outlook, saying it still expects annual sales growth of between 2.5% and 4.5%, roughly in line with analyst expectations. It also forecasts adjusted earnings per share growth of up to 4%, above the 2.4% growth expected by analysts surveyed by LSEG.

Home Depot and the broader home improvement industry have faced challenges due to lower housing turnover, economic uncertainty, and delays in larger renovation projects.

Earlier this year, there had been hopes that lower mortgage rates could provide some relief for the sector. However, renewed conflict in the Middle East contributed to another rise in mortgage rates, reducing optimism.

At the same time, Home Depot has continued focusing on attracting professional customers such as contractors and roofers, who currently account for around half of the company’s revenue.

In 2024, the retailer acquired SRS Distribution, a supplier for roofing, landscaping, and pool professionals, in a deal valued at $18.25 billion. It also purchased specialty building products distributor GMS last year.

Last week, SRS completed its acquisition of Mingledorff’s, a wholesale distributor of HVAC equipment, parts, and supplies serving residential and commercial customers.

Home Depot said the acquisition expands its access to a total addressable market worth approximately $100 billion.

McPhail said the company’s recent investments and acquisitions are aimed at strengthening its position in the roughly $700 billion professional contractor market.

“All of the things we’re doing to build out our pro capabilities — and through the acquisitions we’ve made over the past several years — is to help us gain more share in the $700 billion pro market,” he said. “We have a right to win that $700 billion, but we just don’t quite have the ability to win yet.”

News.Az 

By Nijat Babayev