TLDR
- Home Depot reported mixed Q1 earnings with revenue up 9.4% but EPS down 3%
- Same-store sales fell 0.3%, but US same-store sales rose 0.2%
- Company plans to keep prices unchanged despite new tariffs
- Home Depot stock rose 2% in premarket trading despite the earnings miss
- Housing market slowdown continues to impact the home improvement sector
Home Depot released its first-quarter earnings report on Tuesday, showing mixed results as the company navigates through an uncertain economic landscape shaped by the Trump administration’s tariffs and a sluggish housing market.
The home improvement retailer reported revenue of $39.86 billion, up 9.4% from the same period last year. This figure beat Wall Street’s expectations of $39.29 billion.
However, earnings per share came in at $3.56, missing the expected $3.59. This marks the first time in five years that Home Depot has missed earnings expectations.
Home Depot $HD Earnings Report
1⃣ Revenue: $39.86B ✅ vs. est. $39.25B
2⃣ EPS: $3.56 ❌ vs. est. $3.59 pic.twitter.com/5izkSE8Ski— CatCapital (@CatCapital_Ltd) May 20, 2025
Same-store sales decreased by 0.3%, slightly worse than the 0.2% decline analysts predicted. This represents a setback after the company had finally returned to positive same-store sales growth in Q4 after eight consecutive quarters of decline.
On a positive note, US same-store sales grew by 0.2%, beating expectations of a 0.16% decrease.
Tariff Impact and Price Strategy
Despite concerns about the impact of tariffs, Chief Financial Officer Richard McPhail indicated that the company plans to keep prices unchanged.
The US recently reduced tariffs on Chinese imports from 145% to 30%, while suspending reciprocal tariffs in favor of a 10% universal duty. However, rates remain higher than historical levels.
A Home Depot spokesperson told Yahoo Finance that instead of raising prices, the company will work with suppliers and diversify its sourcing. “Twelve months from now, no single country outside of the United States will represent more than 10% of our purchases,” they stated.
Analysts believe Home Depot is better positioned to handle tariff pressures than competitors like Lowe’s due to its larger Pro business, which makes up 50% of its customer base.
Housing Market Headwinds
The sluggish housing market continues to weigh on the home improvement sector. Homebuilder confidence deteriorated in May, with expected sales and buyer traffic falling to an 18-month low.
Store visit data shows Home Depot had 3.8% fewer visits throughout the quarter compared to the same period last year, according to Placer.ai.
High mortgage rates and home prices have kept many potential buyers sidelined, affecting home improvement demand since people typically renovate homes just before selling or after buying.
The 10-year and 30-year Treasury yields rose after Moody’s downgraded the US government’s long-term credit rating from AAA to AA1, potentially leading to higher financing costs for home improvement projects.
Despite these challenges, investors seemed relieved the results weren’t worse. Home Depot stock rose 2% in premarket trading, reaching $387.31.
CEO Ted Decker noted in the earnings release that the results “were in line with our expectations” as the company saw customers engage around “smaller projects.”
The company reaffirmed its full-year 2025 guidance, expecting sales growth of 2.8% and same-store sales growth of 1%. Adjusted earnings per share are projected to decline about 2%.
Transaction growth was strong at 2.10%, far exceeding expectations of 0.18%. Average ticket size grew slightly by 0.03%, beating the expected decline of 0.65%.
Bank of America analyst Rafe Jadrosich expects single-family housing starts to continue slowing due to elevated mortgage rates, higher levels of unsold new home inventory, and weak consumer confidence.
Prior to Tuesday’s earnings report, Home Depot stock was down 2.5% year to date, while rival Lowe’s was down nearly 5%, compared to a 1% gain for the S&P 500.
Home Depot will hold its earnings call at 9 a.m. Eastern time, where executives are expected to provide more details on tariff strategies and the company’s outlook for the remainder of the year.
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