Home Depot Tops Quarterly Expectations as Smaller Home Projects Support Sales

Home Depot delivered stronger-than-expected second-quarter results Tuesday, showing that consumers are still spending on home maintenance and improvement even as elevated borrowing costs continue to weigh on major renovation projects. Shares of Home Depot, which trades under HD, moved higher in premarket trading following the results.

The home-improvement retailer reported quarterly revenue of $47.86 billion, an increase of 5.7% from the comparable period a year earlier and above Wall Street expectations of approximately $47.27 billion. Comparable sales increased 1.7% across the company, while comparable sales at U.S. stores rose 1.3%.

Home Depot earned $4.77 billion during the quarter, equivalent to $4.79 per share. On an adjusted basis, earnings reached $4.92 per share, exceeding analysts' expectations of roughly $4.73 per share.

Results indicate that spending on smaller home-improvement projects remains relatively resilient. Customers have continued purchasing products for maintenance, painting, landscaping and other projects that generally require less money and financing. Larger remodeling projects remain more challenging as high mortgage rates and an unusually slow housing market discourage homeowners from moving, refinancing or undertaking expensive renovations.

The company's professional customer business also continues to play an increasingly important role. Home Depot has expanded its exposure to contractors and other professional customers through acquisitions and investments in distribution capabilities. Professional customers now account for roughly half of the company's annual sales, providing another source of demand beyond traditional do-it-yourself shoppers.

Home Depot is also expanding its fulfillment options. The retailer has rolled out an express-delivery service nationally that allows customers in eligible markets to receive selected products within approximately three hours. The initiative is part of a broader effort to make inventory more readily available to both homeowners and professional contractors.

Management maintained its outlook for the full fiscal year. Home Depot continues to expect total sales growth of approximately 2.5% to 4.5%, with comparable sales ranging from roughly flat to an increase of 2%. The company expects certain tariff refunds to help offset pressure from higher transportation, fuel and other operating costs.

The housing environment remains a major variable for the retailer. High home prices and borrowing costs have sharply reduced housing turnover, historically an important catalyst for remodeling spending. At the same time, the aging U.S. housing stock creates a longer-term need for repairs and renovations, which could provide Home Depot with a meaningful source of future demand when housing activity eventually improves.

The company is also operating under temporary leadership arrangements while Chief Executive Ted Decker is on medical leave. Chief Financial Officer Richard McPhail and senior operations executive Ann-Marie Campbell are overseeing key responsibilities during his absence.

For investors, the quarter provides evidence that Home Depot can generate modest comparable-sales growth even in a difficult housing environment. The central question now is whether continued strength in smaller projects and professional spending can sustain growth until financing conditions improve enough to bring consumers back to larger remodeling projects.