Home Depot Exceeds Expectations Despite Sales Dip

• Q4 earnings per share of $2.58 and revenue of $38.20 billion both beat expectations; comparable sales rose 0.4% despite store transactions declining 1.6% year-over-year
• Big-ticket purchases over $1,000 increased 1.3% as professional contractor sales outperformed do-it-yourself segment; company opened 12 stores in fiscal 2025 and plans 15 more this year
• CFO cited 'frozen housing environment for three years' and rising consumer uncertainty about housing affordability and job losses; company is analyzing tariff impacts with over half of products sourced domestically

Home Depot Exceeds Expectations Despite Sales Dip - Summary

Key Performance Metrics:

Home Depot reported Q4 fiscal 2025 results that exceeded Wall Street expectations despite a sales decline. Revenue reached $38.20 billion versus $38.12 billion expected, while the company beat earnings estimates after missing three consecutive quarters. Net income fell to $2.57 billion ($2.58 per share) from the prior year, with total revenue declining from $39.70 billion, partially due to one fewer week in fiscal 2025 (contributing $2.5 billion less).

Operational Highlights:

• Comparable sales increased 0.4% overall and 0.3% in the U.S.
• Store transactions dropped 1.6% year-over-year, but average ticket rose 2.4%
• Big-ticket purchases (over $1,000) increased 1.3%
• Professional contractor segment outperformed DIY consumers
• Company opened 12 stores in fiscal 2025, plans 15 more this year
• Board increased quarterly dividend 1.3% to $2.33 per share

Market Challenges:

The company faces headwinds from a "frozen housing environment" persisting for three years, driven by high interest rates, low housing turnover, and consumer uncertainty about affordability and job security. CFO Richard McPhail noted declining consumer confidence as an added pressure.

Strategic Positioning:

Home Depot is diversifying imports so no single country outside the U.S. represents more than 10% of purchases. The company is evaluating impacts from President Trump's proposed 15% across-the-board tariff following Supreme Court decisions on import duties. Over half of merchandise sold originates domestically.

Outlook:

Despite challenges, potential catalysts include moderating mortgage rates (30-year fixed matching 2022 lows) and the upcoming spring selling season. The company maintained its current fiscal year forecast.