Home Depot posted fiscal first-quarter results that topped Wall Street forecasts, with sales climbing nearly 5 percent even as consumer confidence craters and gas prices bite into household budgets. The nation's largest home-improvement retailer reaffirmed its full-year guidance Tuesday, a signal that management sees no reason to flinch, at least not yet.
The company reported adjusted earnings per share of $3.43, edging past the $3.41 analysts surveyed by LSEG had expected. Revenue landed at $41.77 billion against expectations of $41.52 billion. Net income for the three-month period ending May 3 came in at $3.29 billion, or $3.30 per share, down from $3.43 billion, or $3.45 per share, in the same quarter a year earlier.
That decline in profit deserves attention. Sales rose, but the bottom line shrank. The gap tells a familiar story: input costs, acquisition expenses, and margin pressure are doing their work even when the top line cooperates.
Home Depot finance chief Richard McPhail told CNBC in an interview that the retailer's core customer base, homeowners, remains more insulated than other consumer groups from the economic headwinds battering confidence surveys.
"The homeowner in a relative sense is perhaps more protected financially than other customer cohorts and so we continue to see engagement."
That's the good news. The less encouraging part came in the same conversation. McPhail acknowledged that shoppers continue to hold off on bigger-ticket projects, the kind of spending that drives meaningful revenue growth for a retailer built on kitchen remodels, deck replacements, and bathroom overhauls.
"They continue to tell us that they are going to defer their spend on larger projects. That's consistent with what they've told us the last few years."
The numbers bear that out. Comparable sales, a key retail health metric, rose just 0.6 percent, missing the 0.8 percent that StreetAccount analysts had projected. It marked the third consecutive quarter in which that figure failed to move more than half a percentage point in either direction. Comparable transactions, meanwhile, fell 1.3 percent, extending the streak to four straight quarters of declines.
Fewer customers walking through the door, spending slightly more per trip. That's a pattern that can sustain a retailer for a while. It cannot sustain one forever.
Home Depot's current quarter landed better than the rough stretch the company endured in late 2025. Last November, the retailer cut its fiscal 2025 outlook after an anticipated third-quarter spending surge simply never showed up. CEO Ted Decker said at the time that "consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand." The company slashed its adjusted earnings-per-share guidance to a 5 percent decline from a prior forecast of just 2 percent, and lowered its comparable sales projection to barely positive.
Earlier results told a similar story. In the third quarter of fiscal 2025, Home Depot earned $3.65 billion, down from $3.81 billion a year before, and comparable sales fell 1.3 percent, though that represented an improvement from a 3.3 percent decline the prior quarter. Analyst Neil Saunders of GlobalData described it as "the shallowest rate of decrease in two years" and suggested the company might be nearing the end of its sales slump.
The latest quarter suggests Saunders may have been right, or at least close. Comparable sales have clawed their way back above zero, and revenue is growing again. But the improvement is fragile. Mortgage rates spiked once more after conflict in the Middle East reignited earlier this year, snuffing out optimism that had built when rates briefly dipped.
High mortgage rates lock homeowners in place. People who refinanced at 3 percent have no intention of selling and buying at 7 percent. That means fewer home sales, fewer move-in renovations, and fewer of the big-ticket projects McPhail says customers keep deferring.
If homeowners won't spend on major projects, Home Depot's plan is to chase the professionals who do. Pro shoppers, contractors, builders, tradespeople, already account for roughly half of the company's revenue. McPhail made clear the company intends to push that share higher.
"All of the things we're doing to build out our pro capabilities, and through the acquisitions we've made over the past several years, is to help us gain more share in the $700 billion pro market. We have a right to win that $700 billion, but we just don't quite have the ability to win yet."
Home Depot has backed that ambition with serious capital. In 2024, the company acquired SRS Distribution for $18.25 billion, a massive bet on building-materials distribution aimed squarely at professional customers. Last year it bought GMS, a specialty building products distributor. And just last week, SRS completed its acquisition of Mingledorff's, a wholesale distributor of HVAC equipment, parts, and supplies serving both residential and commercial customers.
That Mingledorff's deal, Home Depot said, opens up a total addressable market worth roughly $100 billion. The company is clearly trying to become a one-stop supply chain for contractors and tradespeople, not just the place where a weekend warrior picks up a gallon of paint. The retailer has also been rolling out AI-powered phone systems across all U.S. stores, part of a broader operational push to modernize how it serves both retail and professional customers.
Whether that strategy pays off depends on whether the housing market eventually thaws. Pros need projects. Projects need financing. Financing needs reasonable interest rates. That chain has been stuck for the better part of three years.
Home Depot reaffirmed its expectation that fiscal 2026 sales will grow between 2.5 and 4.5 percent, with adjusted earnings per share rising as much as 4 percent. Wall Street, via LSEG, had been expecting roughly 4 percent sales growth and 2.4 percent earnings growth, so management's own projections remain at or above the Street's baseline.
Gross margin, however, came in at 33 percent, slightly below the 33.2 percent StreetAccount had expected. That small miss matters. When a company is growing revenue through acquisitions rather than organic demand, margin compression can signal that the growth is being bought, not earned. The acquisitions of SRS, GMS, and Mingledorff's add revenue but also add integration costs, amortization of intangible assets, and operational complexity.
Home Depot's reported earnings per share of $3.30 included one-time costs related to the value of certain intangible assets. The adjusted figure of $3.43 strips those out. The gap between reported and adjusted numbers is worth watching as the company digests billions of dollars in acquisitions. Meanwhile, the company has also had to contend with internal challenges like a recent fraud case in Miami involving an alleged $4.3 million markdown scheme by a store manager.
Home Depot is a useful barometer for the real economy, the one where people fix leaky roofs, replace worn-out appliances, and decide whether this is the year to finally redo the kitchen. Right now, that barometer reads: stable but cautious.
Homeowners are spending on maintenance and small repairs. They are not spending on transformations. They are not selling their homes and buying new ones. They are not taking out home equity lines to fund dream renovations. They are patching, painting, and waiting.
That behavior is rational. With gas prices elevated, grocery bills still high relative to pre-2020 norms, and mortgage rates making large financed projects expensive, the average homeowner is doing exactly what a prudent person would do: holding steady and deferring the big stuff. The retailer has also invested heavily in loss-prevention technology, including parking lot camera systems, as it works to protect margins from retail theft, another cost of doing business in an era of rising shrinkage.
McPhail's framing, that homeowners are "more protected financially" than other consumer groups, is telling. It implies that other cohorts are not protected. Renters, lower-income households, and consumers carrying variable-rate debt are absorbing the full force of inflation and elevated interest rates. Home Depot's core customer skews older, wealthier, and more likely to own property outright or carry a low fixed-rate mortgage. That insulation is real, but it has limits.
The company's willingness to reaffirm guidance is a vote of confidence, or at least a refusal to blink. Whether that confidence holds through a full fiscal year will depend on forces well beyond Home Depot's control: the Federal Reserve's rate path, energy prices, housing inventory, and whether consumer sentiment stabilizes or continues its slide.
There is also the broader question of what happens when regulatory pressures mount in states like Connecticut, where lawmakers have pushed back against the surveillance tools retailers rely on to fight theft, adding yet another variable to an already complicated operating environment.
Home Depot beat expectations. It held its guidance. Its core customer is still showing up. But comparable transactions keep falling, margins came in light, and the company's growth engine is running on acquisitions rather than a genuine rebound in demand. The housing market remains frozen by interest rates, and consumers, even the relatively well-off ones who shop at Home Depot, are telling the company the same thing they've said for three years: not yet.
When the people who can afford to spend choose not to, that tells you more about the economy than any confidence survey ever will.