Home Depot (HD) investors hoping for a turnaround in the housing market may have to keep on waiting.
The home improvement chain posted mixed earnings on Tuesday morning as consumers reconsider home renovation projects due to Trump administration’s tariffs. Revenue jumped 9.4% year over year to $39.86 billion, compared to the $39.29 billion Wall Street expected. Net earnings declined 4.95% to $3.45, missing the $3.59 expected.
Same store sales fell 0.3%, compared the 0.20% decrease expected. That’s a reversal after same store sales growth turned positive in Q4 after eight straight quarters of decline. The company said it was negatively impacted from foreign exchange rates by approximately 70 basis points.
In the release, CEO Ted Decker said the results “were in line with our expectations” as it saw customers engage around “smaller projects.”
Prior to earning report, Home Depot stock is down 2.5% year-to-date. Shares rose 2% in premarket trading. Rival Lowe’s (LOW) stock is down nearly 5% versus a 1% gain for the S&P 500 (^GSPC).
“We project it to take multiple quarters and into next year before the growth becomes more solid and flows through to earnings, as near-term macro pressures continue, particularly with uncertainty amidst new tariff policies,” Telsey Advisory Group’s Joe Feldman wrote in a note to clients.
Here’s what Home Depot reported in its first quarter results, compared to what Wall Street expected according to Bloomberg data:
Revenue: $39.86 billion, versus $39.29 billion
Adjusted earnings per share: $3.45, versus $3.59
Same-store sales growth: -0.30%, versus -0.20%
Transaction growth: +2.1%, versus +0.18%
Average ticket size: +0.03%, versus -0.65%
Tariff uncertainty remains a top concern for Home Depot and Lowe’s, which reports results on Wednesday.
The US temporarily dropped tariffs on Chinese imports from 145% to 30%, while so-called reciprocal tariffs have been suspended for a 10% universal duty. However, rates are still much higher than they were historically, and the changing tariff environment may be leading consumers to think twice before embarking on a major renovation.
Read more: What Trump’s tariffs mean for the economy and your wallet
At a conference in early April, Home Depot CFO Richard McPhail said that Asia is an important region for sourcing but “a majority of the goods that we sell are produced in the United States.” He added that “diversification will be an ongoing strategy for us.”
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TD Cowen analyst Max Rakhlenko told clients that Home Depot is “better positioned to manage tariffs,” as its Pro business makes up 50% of its customer business, compared to Lowe’s, which has a 20% exposure to Chinese goods and a larger DIY customer base.
Another factor weighing on the retailer is the sluggish housing market. Homebuilder confidence continued to deteriorate in May. Expected sales in the next six months and traffic from prospective buyers also fell to an 18-month low.
“We expect single-family starts to continue to slow given elevated mortgage rates, higher levels of completed unsold new home inventory, and weak consumer confidence,” Bank of America analyst Rafe Jadrosich wrote in a note to clients.
And on Monday, the 10-year and 30-year Treasury yields (^TNX, ^TYX) rose after Moody’s downgraded the US government’s long-term credit rating from AAA to AA1. While that isn’t reflected in Q1 earnings, higher Treasury yields likely spell higher financing costs for home improvement projects and homebuying, creating another headwind for the sector.
Read more: What is the 10-year Treasury note, and how does it affect your finances?
The Home Depot logo is displayed outside the home improvement retail store in Los Angeles on Feb. 21, 2025. ( PATRICK T. FALLON/AFP via Getty Images) ·PATRICK T. FALLON via Getty Images
Home Depot reiterated its guidance. It expects net sales to grow 2.8% and same-store sales to increase by 1% for the full fiscal year.
Companies pulling their financial guidance and warning of higher prices in light of tariffs have become common themes this earnings season. Walmart (WMT) warned last week that higher tariffs will increase retailers’ costs, yet price hikes to offset those costs could weigh on consumer demand.
“The consumer is still being very choiceful, and that will eat into discretionary, no doubt,” SW Retail Advisors president Stacey Widlitz told Yahoo Finance.
Feldman said Home Depot “should remain a long-term winner in retail” due to “best-in-class execution, digital prowess, and hybrid work-from-home arrangements causing more maintenance and repair activity.”
He added its pro customer base holds a “significant opportunity” with a roughly $250 billion addressable market following the acquisition of SRS Distribution.
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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