By Savyata Mishra and Nicholas P. Brown
(Reuters) -Home Depot said on Tuesday it will keep prices unchanged despite U.S. tariffs that might however make some products unavailable at the home-improvement chain, which also reported that first-quarter sales beat estimates.
Billy Bastek, Home Depot’s executive vice president of merchandising, told analysts on a post-earnings call that the company intends “to maintain pricing across our portfolio.”
But that means some products could disappear from shelves.
“There’s items that we have that could potentially be impacted from a tariff that, candidly, we won’t have going forward if it doesn’t make sense inside the line structure,” Bastek said. He did not name any specific items that might be affected.
Consumer-facing companies are among the most affected by U.S. President Donald Trump’s high tariffs on imports. Several have issued gloomy quarterly results and pulled annual forecasts, due to economic uncertainty. The nation’s largest retailer, Walmart, warned last week that shoppers could soon face higher prices due to tariffs.
Trump later suggested Walmart should “eat” the higher costs.
Atlanta-based Home Depot is less exposed to China than Walmart. It sources less than half of its goods outside North America, and has cut its exposure to China in recent years. CEO Ted Decker told investors that within the next 12 months, no single country outside the U.S. will represent more than 10% of its purchases.
Net sales for the quarter ended May 4 came in at $39.86 billion, compared with estimates of $39.31 billion, according to data compiled by LSEG. It logged adjusted profit per share of $3.56, missing expectations of $3.60.
The company might be able to lean on suppliers to bear the brunt of tariffs, said Sheraz Mian, director of research at Zacks Investment Research.
“But if they are committing to pass none of the incremental impact on to end consumers, then they will have to absorb the remaining tariff costs internally, which would hit margins,” he added.
The company’s operating margin dipped to 12.9% for the quarter, down from 13.9% for the year-ago period.
BUDGET CONSTRAINTS
Recent slowness in home improvement retail – often viewed as a bellwether for economic health – has observers watching Home Depot closely for signs of a downturn. The retailer is in its “Super Bowl season,” Bastek said, referring to the spring and summer months when people tend to lawns, gardens and DIY home projects.
Budget constraints continue to weigh on larger home renovation activities, which Decker acknowledged on Tuesday could be a result of macroeconomic fears.
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