Due to Tariffs, Home Depot Will Not Raise Prices, as U.S. Sales Grow Unexpectedly

Home Depot Inc. broke its impressive five-year streak of beating earnings expectations on Tuesday, yet its stock still moved higher in premarket trading. This came as the home improvement giant surpassed analysts' revenue forecasts for the first quarter and maintained its guidance for the full fiscal year.

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Despite the earnings miss, Home Depot shares rose 2.4% in early morning trades. The company reported a first-quarter profit of $3.4 billion, translating to $3.45 per share, compared to $3.6 billion, or $3.63 per share, during the same period a year earlier. On an adjusted basis, earnings stood at $3.56 per share, slightly below Wall Street’s forecast of $3.60, as compiled by FactSet. This marks the company’s first earnings miss since May 19, 2020, ending a run of 19 straight quarters of outperforming consensus earnings estimates.

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Still, revenue proved to be a bright spot. Home Depot’s total sales increased 9.4% to $39.9 billion, topping analysts’ projections of $39.3 billion. While same-store sales overall dipped 0.3%—slightly worse than the expected 0.1% decline—U.S. same-store sales rose 0.2%, narrowly exceeding the forecast of no change.

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The Atlanta-based retailer also reiterated its full-year outlook. Home Depot anticipates roughly 2.8% growth in sales, with adjusted earnings expected to decline around 2% from the $15.24 recorded in fiscal 2024. Comparable-store sales are projected to grow about 1% on a 52-week adjusted basis.

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These results arrive during a turbulent time for the retail sector. Companies are navigating shifting consumer behavior and new economic challenges tied to the latest round of tariffs introduced by former President Donald Trump. Just last week, Walmart Inc. warned that these tariffs on imported goods are likely to drive up retail prices, prompting a strong reaction from Trump. The uncertain trade environment has led several retailers to suspend or adjust their financial forecasts during this earnings season.

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In a client note released early Tuesday, Mizuho Securities analyst David Bellinger pointed to the modest uptick in U.S. same-store sales as an encouraging sign, noting that trends appeared to improve as the quarter progressed. This suggests Home Depot may be stabilizing, even as the broader retail industry grapples with volatility.

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Home Depot’s CEO, Ted Decker, commented that the company’s performance aligned with internal expectations. He highlighted customer interest in smaller home improvement projects and the success of spring promotional events as key contributors to the quarter’s revenue strength.

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Despite Tuesday’s gain, Home Depot’s stock is still down 2.5% year-to-date as of Monday’s close. That compares unfavorably with the S&P 500, which is up 1.4% over the same period. While the company’s shares have lagged the broader market, investors appear encouraged by the retailer’s ability to sustain sales momentum even amid mixed economic signals.

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The company’s earnings miss does raise some questions about future growth prospects, especially in a climate of rising costs and potential tariff-related price increases. However, its solid revenue performance and consistent customer engagement, particularly in the U.S. market, seem to provide a cushion of confidence for investors.

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Retail analysts will be watching closely to see how Home Depot navigates the rest of the fiscal year. The housing market remains a mixed bag, and home improvement trends could be influenced by interest rates, consumer confidence, and seasonal spending patterns. Yet, Home Depot's reaffirmed guidance and continued strength in core sales metrics suggest the company has room to maneuver.

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While the earnings shortfall broke a notable streak, the overall tone from Wall Street has been relatively upbeat, thanks to stronger-than-expected sales and positive signals from consumer demand. That optimism was enough to give the stock a lift in early trading, even in the face of ongoing macroeconomic uncertainty.

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In short, Home Depot’s latest quarter reflects resilience in the face of challenges. While profit came in a bit light, strong revenues, firm guidance, and stable U.S. performance suggest the home improvement giant remains well-positioned. Investors may see this as a sign that the company can weather short-term pressures while continuing to deliver long-term value.

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