Home Depot says its sales are healthy, but here's where customers are holding back

By Tomi Kilgore and Bill Peters

Profit and total sales beat expectations, but comparable sales growth comes up a bit shy

Home Depot's stock rose Tuesday as the retailer's earnings beat expectations and its full-year outlook was affirmed.

Shares of Home Depot crept higher on Tuesday after the home- improvement giant kept its full-year outlook intact - a relief for investors worried that higher gasoline prices due to the Iran war would further crimp consumer spending and hold down a struggling housing market.

The retailer beat fiscal first-quarter profit and total sales expectations but reported comparable sales that rose less than forecast, as more shoppers remain reluctant to commit to bigger, costlier projects.

"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 CEO Ted Decker.

During Home Depot's earnings call, Decker said that while consumers were holding back on larger projects, they were "engaged across more departments" during the first quarter than the company had seen previously.

Comparable big-ticket purchases - those that cost more than $1,000 - were up 0.8% during the first quarter. That increase was a bit of a slowdown from the gains seen in the fourth quarter, as homeowners hold off on renovations that aren't deemed essential.

However, Decker said Home Depot's consumers were holding up overall, despite the price shocks they've dealt with over the past several years and the higher interest rates that have kept the housing market frozen. A sales pickup in early May as weather improved provided reason for optimism about consumer engagement.

"You look at our core customer, they're probably amongst the healthiest of all consumers," he said. "They tend to own their homes. They did have that 50% value pop in the value of their homes over the past several years. And their portfolios in equities have also improved."

Home Depot shares (HD) rose 0.9% on Tuesday. The stock gained 0.8% on Monday, after closing Friday at its lowest price since November 2023.

For the quarter to May 4, comparable sales, or sales of stores open for more than a year, rose 0.6% from a year ago, the fourth straight quarter of growth. But the results missed the average analyst estimate compiled by FactSet of 0.8% growth. Sales in U.S. stores increased 0.4%.

Total sales rose 4.8% to $41.77 billion, above the FactSet consensus of $41.59 billion.

The cost of sales rose 6% from a year ago, which reduced gross margin, a measure of how profitable sales are, to 33% from 33.8%.

The company affirmed its full-year guidance for comparable sales growth of approximately flat to 2%, while the outlook for total sales growth was held steady at 2.5% to 4.5%.

D.A. Davidson analyst Michael Baker said the reiterated guidance was perhaps "mildly positive," in that the pressure on consumers associated with the continuation of the Iran war "could have led to a downtick."

Net income for the first quarter fell 4.2% from a year ago to $3.29 billion, while adjusted earnings per share, which excludes nonrecurring items, slipped to $3.43 from $3.56 but beat analyst expectations of $3.41.

The outlook for full-year adjusted EPS growth was kept at flat to 4%.

The stock has dropped 12.3% in 2026, while shares of rival Lowe's (LOW) have lost 9.3% and the S&P 500 SPX has gained 7.8%.

-Tomi Kilgore -Bill Peters

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05-19-26 1635ET