Home Depot's comparable sales rose 1.7%, the highest since late 2022, as the retailer held full-year guidance. CFO cited 'frozen housing' conditions and customer hesitancy on large projects.
Home Depot topped Wall Street's second-quarter forecasts Tuesday and kept its full-year outlook intact. CFO Richard McPhail described 'frozen housing market' conditions that still delivered the company's strongest comparable sales growth in two and a half years.
Net income rose to $4.77 billion, or $4.79 per share, from $4.55 billion, or $4.58 per share, a year earlier. Adjusted earnings came to $4.92 per share, above the $4.88 consensus from an LSEG survey of analysts. Comparable store sales climbed 1.7%, well ahead of the 0.9% gain analysts had predicted, according to StreetAccount. McPhail said it was the highest such number since the third fiscal quarter of 2022.
"We continue to operate in what I call 'frozen housing market' conditions," McPhail told CNBC. "we also know that we're taking share and that we're serving our customers better every day." He cited "broad engagement" across both pro and do-it-yourself categories.
The company reaffirmed its fiscal 2026 sales growth forecast of 2.5% to 4.5% and an operating margin between 12.4% and 12.6%. McPhail said the decision to hold guidance rather than raise it reflected greater market uncertainty. Home Depot said its outlook includes tariff refunds "expected to partially offset unplanned fuel, energy, and other product input costs." Those refunds, the CFO said, let the retailer "maintain value" while cost pressures build elsewhere.
Consumer behavior showed a clear pattern. "They've told us they have the means to spend, they're just hesitant," McPhail said. Customers worry about inflation, fuel costs, and general uncertainty, especially when a project grows larger. The CFO described the customer base as "a healthy cohort" that is still not ready to commit to major renovations.
Home Depot's strategy leans on the professional contractor segment, a group executives have said is largely unaffected by the macro climate. "The story of the quarter is a story of share gain with the pro and the consumer," McPhail said.
Last week the company disclosed that CEO Ted Decker is taking a temporary medical leave of absence for a few months. Ann- Marie Campbell, senior executive vice president of U.S. stores and operations, will oversee day-to-day operations. McPhail will add financial management and the pro business to his duties.
McPhail struck a patient tone on the housing backdrop. "We're focused on controlling what we can control," he said. "We have been consistent through the years that in spite of a frozen housing environment, we're going to keep leaning into investment because we know that over the long run, conditions for home improvement demand are strong."
The stock carries an AlphaScala Score of 48 out of 100, a Mixed rating that reflects the tension between solid execution and a sluggish housing market. (HD stock page)
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