Home Depot posted a roughly 4% decline in quarterly sales, but still exceeded Wall Street’s expectations for both earnings and revenue in the fourth quarter of fiscal year 2025. The results, released Tuesday, , reflect a continuing slowdown in the housing market and cautious spending by homeowners.
The Atlanta-based retailer reported adjusted earnings per share of $2.72, surpassing the $2.54 expected by analysts surveyed by LSEG. Revenue reached $38.20 billion, slightly above the anticipated $38.12 billion. Despite the sales dip, Home Depot’s stock performance has been relatively strong, down approximately 2% over the past year but up around 10% year-to-date, compared to the S&P 500’s near 14% gain over the last year and flat performance so far in 2026.
The company maintained its full-year fiscal 2026 forecast, initially shared in December, projecting total sales growth between 2.5% and 4.5%. Adjusted earnings per share are expected to be roughly flat to up 4% from $14.69 in the prior fiscal year. Comparable sales growth is forecast to range from flat to up 2%.
A ‘Frozen’ Housing Market
Home Depot’s Chief Financial Officer, Richard McPhail, described the U.S. Housing market as “frozen” for the past three years, with no significant improvement in sight. He noted a growing sense of consumer uncertainty and a decline in consumer confidence as contributing factors to the slowdown. “Customers have told the company that they are concerned about housing affordability and job losses,” McPhail said, sentiments that are shaping the company’s outlook for the year.
The challenges facing Home Depot mirror broader trends in the housing sector. Mortgage rates, while recently dipping to 5.99% on – the lowest level since 2022 – have remained elevated, dampening both home sales and renovation activity. A lack of housing turnover, where people are buying and selling homes, directly impacts demand for home improvement projects.
Strategic Adjustments and Pro Sales Growth
In response to the challenging environment, Home Depot has taken steps to streamline operations. In late January, the company laid off 800 employees and implemented a five-day-a-week return-to-office policy. However, the company is also focusing on areas of strength, particularly its professional customer base.
Sales to home professionals – contractors, roofers, and other tradespeople – have outperformed do-it-yourself sales. This growth is partly attributable to Home Depot’s recent acquisitions. The company acquired SRS Distribution for $18.25 billion in 2024 and GMS, a specialty building products distributor, for approximately $4.3 billion last year. These acquisitions have expanded Home Depot’s reach within the professional segment.
McPhail indicated that pro sales were stronger than DIY sales during the fourth quarter, though specific figures were not disclosed. He also emphasized that Home Depot is gaining market share even as the overall sector experiences headwinds.
Tariff Concerns and Supply Chain Management
Home Depot is also navigating a changing landscape of import duties. Following a Supreme Court ruling on , which deemed some Trump administration tariffs illegal, former President Trump proposed an across-the-board global tariff of 15%. McPhail stated that the company is “still in the middle of our analysis” regarding the potential impact of these tariffs.
Home Depot is mitigating risk by diversifying its supply chain. Currently, no single country outside the U.S. Accounts for more than 10% of the company’s purchases. This strategy aims to reduce vulnerability to geopolitical and trade-related disruptions.
Looking Ahead: Spring and Beyond
Despite the current challenges, Home Depot remains optimistic about the future. The company is preparing for its peak selling season in the spring. While acknowledging the ongoing pressures, McPhail noted that the business has been relatively stable throughout the year, even when excluding the impact of storms, which typically drive demand for products like roofing materials and generators.
Net income for the three-month period ending , fell to $2.57 billion, or $2.58 per share, compared to $3.0 billion, or $3.02 per share, in the same period last year. Revenue decreased to $39.70 billion from $39.70 billion the previous year, with a $2.5 billion difference attributed to having one fewer week in the most recent fiscal year. Comparable sales increased 0.4% overall and 0.3% in the U.S.
Store transactions declined by 1.6% year-over-year, but the average transaction value rose by 2.4%. Purchases over $1,000 increased by 1.3% compared to the previous year, potentially reflecting modest price increases across certain categories. McPhail declined to specify which items have seen price adjustments.
Home Depot opened 12 stores in fiscal 2025 and plans to open 15 more in the current fiscal year. The company’s board of directors also increased its quarterly dividend by 1.3%, or 3 cents, to $2.33 per share, payable next month.
