According to reports from CNBC and Investing.com, Home Depot delivered better-than-expected fiscal second-quarter results, beating Wall Street estimates on both revenue and adjusted earnings. The retailer reported adjusted earnings per share of $4.92, surpassing expectations of $4.73, while revenue rose 5.7% year-on-year to $47.86 billion, ahead of the $47.27 billion expected. Net income increased to $4.77 billion, or $4.79 per share, compared with $4.55 billion, or $4.58 per share, a year earlier. Comparable sales rose 1.7%, exceeding the 0.9% expected and marking the company's strongest comparable-sales performance since the fiscal third quarter of 2022. The company's gross margin improved to 33.7%, up 25 basis points, driven by supply chain efficiencies and favorable product mix, with tariff refunds helping offset cost pressures from fuel, energy and product inputs. Return on equity reached 128%, reflecting strong capital efficiency, while the company maintained its dividend yield at 2.76% supported by 16 consecutive years of dividend increases.
As reported by CNBC, CFO Richard McPhail explained that despite the strong quarter, Home Depot continues to operate in what he described as "frozen housing market conditions." According to McPhail, customers have the means to spend but remain cautious about taking on large home improvement projects due to concerns over inflation, fuel costs and broader economic uncertainty. While customer engagement remained healthy in the first half, consumers continued to delay bigger projects as uncertainty increased with the size of their spending commitments. The company saw broad engagement across both its professional and do-it-yourself customer segments, but consumers have yet to return meaningfully to major projects. Big-ticket transactions above $1,000 rose 2.4%, with average ticket increasing 2.8% even as transactions fell 1.0%, indicating consumers are focusing on smaller, more affordable projects. McPhail noted that "They've told us they have the means to spend, they're just hesitant," adding that "while we're happy with their level of engagement in the first half, they do tell us they're worried about inflation, about fuel costs and about, about general uncertainty, and so there is a little bit of hesitancy there as the project gets bigger."
According to reports from CNBC and Investing.com, Home Depot reaffirmed its fiscal 2026 guidance, forecasting total sales growth of 2.5%-4.5% and an operating margin of 12.4%-12.6%. The outlook includes tariff refunds expected to offset some higher fuel, energy and product input costs. The company received $730 million in tariff refunds during the quarter, with $685 million used to reduce the cost of goods sold and the remaining $45 million reflected in inventory. CEO Ted Decker commented that "Our results reflect the resilience of the home improvement market and the strength of our Pro customer base. We continue to see stable demand for repair and maintenance projects, though consumers remain cautious on larger renovations." McPhail emphasized that "The story of the quarter is a story of share gain with the pro and the consumer, and we're confident that our investments are working to allow us to win in the market." The company plans to open 15 new stores and 40-50 SRS branches in 2026, with capital expenditures planned at about 2.5% of sales. Management noted that 13 of 16 merchandising departments posted positive comparable sales, with strongest performance in electrical, hardware, plumbing, tools, flooring and millwork categories.
As reported by multiple sources, Home Depot's online sales grew 11%, marking the fifth straight quarter of double-digit growth, as the company continues to invest in its digital platform and supply chain. The company noted strength in categories such as building materials, plumbing, electrical, and tools, while areas like lumber and flooring experienced softer demand. U.S. comparable sales rose 1.3%, with international operations, especially Canada and Mexico, outperforming the U.S. market. The results serve as a bellwether for the U.S. housing and consumer spending environment, with the beat suggesting that despite higher interest rates and persistent inflation, consumers are still prioritizing home maintenance and smaller projects. Merchandise inventories increased to $26.8 billion, up $2 billion from a year earlier, with inventory turns at 4.5 times, down from 4.6 times. Home Depot's stock rose 1.8% in pre-market trading following the earnings release, with investors viewing the performance as a gauge for the broader retail sector and housing market health. The company also announced the nationwide rollout of 'Express Delivery', allowing customers to receive items within three hours without a subscription or membership. Aptus Capital Advisors Head of Equity David Wagner called the move a "direct shot" at the fast delivery speeds of Walmart and Amazon, which could help Home Depot capture more market share.
