Residence Depot (HD) Q3 2025 earnings

Residence Depot on Tuesday lower its full-year revenue forecast and missed Wall Avenue’s earnings expectations for the third straight quarter because it noticed weaker residence enchancment demand, tepid shopper spending and decrease than regular storm exercise.

The retailer stated it now expects full-year gross sales will climb about 3% and comparable gross sales, which take out the affect of one-time components like retailer openings and calendar variations, to be barely optimistic. That compares to its earlier expectations for full-year gross sales to develop by 2.8% and comparable gross sales to extend by 1%.

The revised outlook contains an estimated $2 billion in incremental income from GMS, a building-products distributor that Residence Depot acquired earlier this yr. The corporate’s gross sales weren’t a part of its earlier full-year steerage.

Residence Depot expects full-year adjusted earnings per share to say no by about 5% from the year-ago interval, in comparison with its prior expectations that they might fall by about 2%

In a CNBC interview, Chief Monetary Officer Richard McPhail stated the retailer beforehand anticipated residence enchancment exercise would improve. It additionally anticipated increased gross sales of roofing supplies, mills and different provides that sometimes promote earlier than and after seasonal storms.

Neither dynamic materialized, he stated, placing strain on the enterprise. 

“Once we set steerage, we had anticipated that demand would start to speed up progressively within the again half of the yr as rates of interest and mortgage charges eased,” he stated. “However what we noticed was that ongoing shopper uncertainty and continued strain in housing are disproportionately impacting residence enchancment demand.”

This is what Residence Depot reported for the fiscal third quarter in contrast with Wall Avenue’s estimates, based on a survey of analysts by LSEG:

• Earnings per share: $3.74 adjusted vs. $3.84 anticipated
• Income: $41.35 billion vs. $41.11 billion anticipated

Residence Depot’s inventory dropped about 2% in premarket buying and selling Tuesday. As of Monday’s shut, the corporate’s shares are down about 8% thus far this yr. That trails the S&P 500’s 13% features throughout the identical interval.

For Residence Depot, housing turnover sometimes sparks bigger and extra profitable tasks as prospects repair up their properties earlier than or after shifting. These massive tasks, nevertheless, have dropped in frequency as increased rates of interest have led to steeper mortgage charges and borrowing prices for loans, which a house owner could use to pay for a kitchen rework or main addition.

Since roughly the center of 2023, McPhail has instructed CNBC that householders have been in a “deferral mindset.” That is led to a little bit of a ready sport for Residence Depot, because it awaits both decrease mortgage charges or a shift by shoppers who get used to increased mortgage charges as the brand new regular.

In the latest three-month interval, that ready sport continued. McPhail instructed CNBC that demand was “secure” from the fiscal second quarter to the third quarter when adjusting for the dearth of hurricanes. 

However, he added, “at this level, it is onerous to establish near-term catalysts that might result in acceleration.” 

Residence Depot’s web earnings for the three-month interval that ended Nov. 2 dropped to $3.60 billion, or $3.62 per share, from $3.65 billion, or $3.67 per share, within the year-ago quarter. Income decreased from $40.22 billion within the year-ago quarter.

Common ticket, the standard quantity spent by prospects on the retailer or on the corporate’s web site, rose 1.8% yr over yr within the quarter. Nonetheless, buyer transactions fell 1.6% yr over yr.

A vivid spot within the quarter was on-line gross sales, which rose by 11% yr over yr, McPhail stated.

In comparison with different big-box retailers, Residence Depot’s prospects are typically extra financially secure. About 90% of its do-it-yourself prospects personal their properties and the house professionals who store on the retailer are likely to get employed by householders.

Even so, McPhail stated Residence Depot’s weaker outlook got here partially as a result of consumers throughout earnings teams are reluctant to tackle high-dollar tasks. He stated a slower housing market and the upper value of borrowing has contributed to the pattern.

He stated different components may additionally be having a chilling impact, together with the extended authorities shutdown, an uptick in company layoff bulletins and a decline in residence values in some markets.

As do-it-yourself prospects postpone greater tasks, the corporate has tried to draw extra enterprise from contractors, roofers and different professionals.

The corporate has made two key purchases of pro-related corporations. Final yr, it purchased Texas-based SRS Distribution for $18.25 billion — the most important acquisition in its historical past. The corporate sells provides to professionals within the landscaping, pool and roofing companies. Earlier this yr, Residence Depot introduced it was shopping for GMS.

Like different retailers, Residence Depot has felt the pinch of upper prices on some imported objects due to tariffs. McPhail stated in Could that the corporate was diversifying the nations the place it sourced its items and supposed to “typically keep our present pricing ranges throughout our portfolio.”

Nonetheless, firm leaders warned in August that it might should hike costs in some classes due to increased tariffs.

McPhail instructed CNBC that Residence Depot has elevated some objects’ costs, however stated “the place there have been worth actions, they had been modest.” 

He stated Residence Depot has stored costs the identical for some key objects and even been capable of cut back them. For instance, he stated, its best-selling seven-and-a-half foot Grand Duchess Christmas tree and plenty of of its strings of lights for timber have dropped in worth.