Home Depot topped Wall Street's profit and revenue targets for its fiscal second quarter and held its full-year guidance steady, even as the retailer called U.S. housing conditions "frozen." Comparable sales posted their best gain since 2022, driven by smaller repair and outdoor projects rather than a housing rebound.
Home Depot beat Wall Street's estimates on both profit and revenue in its fiscal second quarter and reaffirmed its guidance for the year. The home-improvement retailer's shares rose about 2% in premarket trading following the results, though Reuters put the premarket move at closer to 1% amid choppy trading.
Profit and revenue outpace forecasts
Home Depot reported adjusted earnings per share of $4.92, above the $4.73 analysts expected. Revenue came in at $47.86 billion versus a $47.27 billion forecast, a gain the company attributed to broad demand. Net income came in at $4.77 billion, or $4.79 per share, compared with $4.55 billion, or $4.58 per share, a year earlier. Revenue rose 5.7% for the quarter.
Comparable sales climbed 1.7%, beating the 0.9% expected. McPhail said it marked the retailer's best comparable-sales number since the fiscal third quarter of 2022. In the U.S. specifically, same-store sales jumped 1.3%, also above the 0.9% estimate. Outdoor categories such as live goods, mulch, patio items and grills drove the momentum.
Housing stays frozen, repairs keep spending alive
CFO Richard McPhail told CNBC: "We continue to operate in what I call 'frozen housing market' conditions". He added that customers have the means to spend but are hesitant about bigger projects because of inflation, fuel costs and general uncertainty.
That hesitancy has pushed shoppers toward smaller jobs. Stubbornly high interest rates have steered homeowners toward repair and maintenance work such as painting and yard work rather than big-ticket renovations. Home Depot's average basket size runs about $90, on products spanning roughly $5 to upwards of $5,000.
Home Depot still expects total sales growth of 2.5% to 4.5% for the year, with operating margin between 12.4% and 12.6%, and said tariff refunds should help offset unplanned fuel, energy and other input costs.
Earnings land during CEO's medical leave
The results came a week after Home Depot said CEO Ted Decker would take a temporary medical leave of absence, with Ann-Marie Campbell overseeing day-to-day store operations and McPhail heading financial management and the pro business. Decker, 63, is expected back within a few months and did not join the post-earnings call.
Home Depot's report kicks off a week of big-ticket retailer earnings, with Lowe's and Target reporting Wednesday and Walmart on Thursday.
Sources: CNBC, Yahoo Finance, Investing.com
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