Quick Summary

• Results: EPS of $4.68 vs. $4.71 expected; revenue $45.28B vs. $45.36B expected.
• Sales outlook: Full-year guidance reaffirmed at +2.8% total sales, ~1% comps.
• Customer trends: Fewer transactions, but higher average spending.
• Strategic shift: Investing in pro customers with $22B+ in acquisitions.
• Stock: Down 2% premarket; up 1.5% YTD vs. S&P’s 10%.

A Rare Double Miss For Home Depot

Home Depot reiterated its full-year sales outlook on Tuesday, even as its fiscal second-quarter results fell just short of Wall Street expectations on both earnings and revenue—a first since 2014.

The home improvement giant reported adjusted earnings per share of $4.68, slightly under analysts’ forecast of $4.71, according to LSEG. Revenue came in at $45.28 billion, also narrowly below the expected $45.36 billion.

Net income for the three months ended August 3 was $4.55 billion, or $4.58 per share, compared with $4.56 billion, or $4.60 per share, in the same quarter last year. Revenue, however, rose nearly 5% year-over-year from $43.18 billion.

Shares slipped about 2% in premarket trading following the results.

Full-Year Forecast Holds

Despite the miss, Home Depot kept its full-year guidance intact:

• Total sales growth: 2.8%
• Comparable sales growth: ~1%

CFO Richard McPhail told CNBC the company continues to see a “deferral mindset” among homeowners—delaying major renovations or projects since mid-2023. Still, he pointed to momentum building as the quarter progressed. Comparable sales rose 0.3% in May, 0.5% in June, and 3.3% in July.

“We absolutely saw momentum continue to build in our core categories throughout the quarter,” McPhail said.

Notably, the company’s outlook does not include any assumption of Federal Reserve rate cuts, which could stimulate homebuying and large-scale remodeling projects.

Betting on Professional Customers

Home Depot has increasingly turned to professional contractors and builders, who now represent 55% of sales, compared with 45% from DIY customers when factoring in its acquisitions.

• Last year, the company bought SRS Distribution for $18.25 billion, expanding into roofing, landscaping, and pool supplies.
• In June, it announced plans to acquire GMS, a specialty building products distributor, for $4.3 billion. That deal is expected to close by late January.

Comparable sales increased 1% overall and 1.4% in the U.S. during Q2. Twelve of Home Depot’s 16 departments posted year-over-year gains. Big-ticket purchases over $1,000 rose 2.6%.

Tariffs Add Uncertainty

Trade policy remains a wildcard. In May, McPhail said Home Depot would avoid broad price hikes despite higher tariffs. Since then, the U.S. has implemented steeper tariffs on dozens of trading partners, though President Trump delayed additional tariffs on Chinese goods for 90 days last week.

McPhail noted most of Home Depot’s imported products in Q2 arrived before tariffs kicked in, insulating results for now.

Consumer Behaviour: Fewer Trips, Bigger Tickets

Customer transactions across Home Depot’s stores and website fell to 446.8 million, down from 451 million a year earlier. But shoppers spent more per trip, with the average ticket rising to $90.01 from $88.90.

The company’s customer base remains relatively resilient: about 90% of DIY shoppers own their homes, and pro customers rely on homeowner demand to sustain business.

Home Depot: Stock Performance

Home Depot shares closed Monday at $394.70. Year-to-date, the stock is up 1.5%, trailing the S&P 500’s nearly 10% gain.