Home Depot posts revenue beat as home improvement challenges come into focus

Home Depot’s (HD) fourth quarter results slightly topped Wall Street’s low expectations on Tuesday.

In a slight improvement, the home improvement chain posted a 14.1% increase in revenue year over year to $39.7 billion. Adjusted earnings per share grew to $3.13, up from $2.86 last year and above estimates of $3.04.

Home Depot has been struggling as shoppers held off on major renovation projects thanks to high interest rates and more cautious spending overall. That pressure is expected to continue; total net sales are expected to grow 2.8% in fiscal year 2025, while same-store sales growth is expected to increase by 1%.

Telsey Advisory Group’s Joe Feldman wrote in a note to clients that the outlook was “softer than expected,” adding that the “cautious approach in this uncertain environment makes sense and could prove conservative” as consumers that have put off big projects over stubbornly higher mortgage rates, that executives say consumers will eventually “get used to.”

Shares initially fell more than 2% before turning higher during premarket trading Tuesday.

For the quarter, same-store sales growth rose 0.8%, whereas Wall Street had been looking for a drop of more than 1.71% to follow the previous eight straight quarters of negative growth. Regions affected by Hurricanes Helene and Milton boosted sales growth by 60 basis points, while higher foot traffic, up 7.6%, and an uptick in the average ticket size, up 0.3%, also contributed.

Feldman noted that pro categories such as roofing, drywall, and lumber also boosted results. E-commerce sales saw strength as well and were up 9%.

The results exceeded company expectations with “greater engagement in home improvement spend, despite ongoing pressure on large remodeling projects,” Home Depot CEO Ted Decker said in the release.

Read more: Best credit cards for home improvement

In fiscal 2024, net sales grew 4.5% year over year to $159.51 billion, above Wall Street’s expectations. Same-store sales dropped for the full year, down 1.8%.

Here’s what Home Depot reported for its fourth quarter results, compared to Wall Street estimates compiled by Bloomberg:

• Revenue: $39.7 billion, versus $39.13 billion

• Adjusted earnings per share: $3.13, versus $3.04

• Same-store sales growth: 0.8%, versus -1.72%

• Foot traffic: +7.6%, versus -1.02%

• Average ticket size: +0.3%, versus -0.35%

Here’s what Home Depot reported for its full-year results, compared to Wall Street estimates

• Revenue: $159.51 billion, versus $158.81 billion

• Adjusted earnings per share: $14.91, versus $15.12

• Same-store sales growth: -1.8%, versus -2.29%

• Foot traffic: +0.9%, versus -1.36%

• Average ticket size: -0.8%, versus -1.36%

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Prior to the release, Wedbush analyst Seth Basham was optimistic that incremental sales were going to come from “hurricanes and wildfires related demand,” he told clients in a note. A solid holiday season, stronger appliance sales, higher lumber prices, and “possibly better demand for bigger ticket projects” were also tailwinds.

Tariffs will also be a top concern for Home Depot and rival Lowe’s (LOW), which reports earnings on Wednesday. The Trump administration recently imposed a 10% additional tariff on Chinese imports and a 25% tariff on steel, while the president signaled fresh tariffs on Canada and Mexico could come next week. Prospects of reciprocal tariffs on a slew of countries are also on the table.

Read more: What are tariffs, and how do they affect you?

The tariffs could increase costs, while any price hikes on retailers’ end may affect consumer demand.

“We source well more than half of our goods domestically and in North America, but there certainly will be an impact,” Decker said in its third quarter earnings call. Investors expect to hear more on a call this morning at 9 a.m. ET.

“Given our scale, our experience going through the previous tariffs … I’d bet on this team’s ability to work with the type of suppliers we have to work through this in a differentiated manner than others in the industry.”

Correction: A previous version of this article listed the incorrect earnings figure. Home Depot’s adjusted earnings per share figure was $3.13. We regret the error.

Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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