Home Depot Warns Weak Housing Market Is Dragging Down Bigger Renovation Plans

The Home Depot Inc. (NYSE:HD) on Tuesday reported first-quarter fiscal 2026 sales of $41.77 billion, up 4.8% year over year and above analyst estimates of $41.53 billion. Comparable sales increased 0.6%, while U.S. comparable sales rose 0.4%. Foreign exchange rates contributed about 55 basis points to comparable sales growth. Earnings And Margins Net earnings declined 4.2% to $3.29 billion, or $3.30 per diluted share, from $3.43 billion, or $3.45 per diluted share, a year earlier. Adjusted diluted EPS fell to $3.43 from $3.56 but beat analyst estimates of $3.41. Operating income decreased 3% to $4.98 billion. Operating margin narrowed to 11.9% from 12.9%, while adjusted operating margin declined to 12.3% from 13.2%. Gross margin fell to 33.0% from 33.8%, while SG&A expenses rose 5.7% to $7.96 billion. "Our first quarter results were in line with our expectations. The underlying demand in our business was relatively similar to what we saw throughout fiscal 2025, despite greater consumer uncertainty and housing affordability pressure," said Ted Decker, chair, president, and CEO. CNBC reported that Home Depot CFO Richard McPhail said homeowners remain financially resilient and continue engaging with the retailer despite economic uncertainty. However, he noted that consumers are still delaying spending on larger home-improvement projects amid geopolitical tensions, weak consumer confidence and a sluggish housing market. Customer Trends And Cash Flow Customer transactions declined 0.9% to 391.1 million, while the average ticket increased 2.3% to $92.76. Operating cash flow rose to $6.03 billion from $4.33 billion a year earlier. Capital expenditures totaled $844 million. Cash and cash equivalents were $1.60 billion at quarter-end, while total debt stood at about $53.5 billion. Outlook Home Depot reaffirmed fiscal 2026 guidance, including total sales growth of 2.5% to 4.5%, implying sales of $168.80 billion to $172.09 billion, compared with analyst estimates of $171.26 billion. The company also expects comparable sales growth ranging from flat to 2%. The company reaffirmed adjusted EPS guidance of $14.69 to $15.28, versus analyst estimates of $15.06, and GAAP EPS guidance of $14.23 to $14.80, versus estimates of $14.73. The retailer expects to open about 15 new stores in 2026. HD Price Action: Home Depot shares were down 0.21% at $299.18 during premarket trading on Tuesday. The stock is near its 52-week low of $296.88, according to Benzinga Pro data. Image via Shutterstock