Home Depot reported first-quarter results that surpassed Wall Street's expectations for both revenue and profit, while maintaining its full-year performance guidance. The company stated that core home improvement demand remains solid, even as fuel prices rise and consumer confidence declines significantly. However, consumers continue to be cautious about spending on major home renovation projects.
Home Depot announced on Tuesday that its primary home improvement customer base continues to show strong spending resilience despite rising fuel costs and a sharp drop in consumer confidence. The company's first-quarter performance exceeded market expectations, and it confirmed it is maintaining its previously set annual operating targets. The company's Chief Financial Officer, Richard McPhail, stated in an interview: "Compared to other consumer groups, the homeowner group has stronger financial resilience, so their demand remains stable." He also acknowledged, however, that within the context of tense geopolitical situations, low consumer confidence, and a sluggish housing market, there is a limit to these consumers' willingness to spend. "Consumers generally indicate they will postpone spending on major home improvement projects, a sentiment consistent with the past few years."
First-Quarter Performance Comparison (vs. Analyst Estimates) Adjusted Earnings Per Share: $3.43 vs. estimate of $3.41 Total Revenue: $41.77 billion vs. estimate of $41.52 billion
Financial results for the quarter ended May 3 showed a net profit of $3.29 billion, or $3.30 per share. This compares to a net profit of $3.43 billion, or $3.45 per share, in the same period last year. Excluding one-time items such as intangible asset impairment, adjusted earnings per share were $3.43. Revenue for the period reached $41.77 billion, an increase of nearly 5% from $39.86 billion in the prior-year period. The company continues to project full-year fiscal 2026 revenue growth in the range of 2.5% to 4.5%, compared to a market consensus of approximately 4%. Adjusted earnings per share are expected to increase by up to 4%, higher than the market's growth expectation of 2.4%.
Home Depot, along with the broader home improvement retail sector, continues to face pressure due to lower housing transaction activity, uncertain economic prospects, and the ongoing postponement of major renovation projects. Earlier this year, the market anticipated a sector recovery as mortgage rates showed slight declines. However, this optimism faded after mortgage rates surged again following the outbreak of conflict in the Middle East.
Against this backdrop, Home Depot is actively expanding its professional contractor customer base, which currently contributes about half of the company's revenue. In 2024, Home Depot acquired SRS Distribution, a supplier of roofing, landscaping, and pool construction materials, for $18.25 billion. Last year, it also acquired specialty building materials distributor GMS. Last week, its SRS unit completed the acquisition of Mingledorff's, a wholesale distributor of HVAC equipment and parts, expanding its coverage into both residential and commercial markets. This acquisition helps Home Depot enter the approximately $100 billion HVAC equipment market. McPhail stated: "We are continuously enhancing our service capabilities for professional customers. Combined with several strategic acquisitions in recent years, our goal is to capture a larger share of the $700 billion professional construction materials market. We have the capability to compete in this market, though we are not yet fully established."
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