Mixed quarter for Home Depot with less storm damage and a more anxious shopper

Home Depot's third-quarter performance showed a mix of results influenced by fewer storms and a cautious consumer base. The company reported earnings of $3.6 billion, or $3.62 per share, down slightly from $3.65 billion, or $3.67 per share, a year earlier. When adjusting for one-time charges, earnings came to $3.74 per share, just 10 cents below Wall Street’s expectations, marking the third straight quarter the retailer missed profit targets. This dip in profits was attributed primarily to less storm damage, which traditionally drives demand for home improvement supplies. Revenue rose to $41.35 billion, surpassing analyst predictions of $41.15 billion. Comparable sales for stores open at least a year in the U.S. nudged up by 0.1%, and overall sales at established stores increased 0.2%. However, customer transactions saw a 1.4% drop, even though the average amount spent per transaction grew slightly from $88.65 to $90.39. CEO Ted Decker noted that while demand stayed mostly steady quarter-over-quarter, anticipated upticks didn’t materialize due to consumer uncertainty and ongoing challenges in the housing market. The housing sector remains a drag on Home Depot’s business, with U.S. home turnover rates at their lowest in decades. Just 28 out of every 1,000 homes changed hands between January and September, reflecting homeowners are holding onto properties longer. This trend traces back to 2022 when rising mortgage rates cooled the homebuying frenzy that had driven demand for renovations and improvements earlier in the decade. Looking ahead, Home Depot lowered its fiscal 2025 adjusted earnings forecast by about 5%, a bigger drop than initially expected, projecting earnings per share to fall from $15.24 in 2024. Despite that, the company raised its sales growth outlook slightly to roughly 3%, up from a prior estimate of 2.8%. It now expects comparable store sales growth to be just positive, though lower than its earlier forecast of about 1%. The company also signaled some modest price hikes in certain product categories due to rising tariff costs, though over half of its products are domestically sourced and thus unaffected by tariffs. The mixed financial results and cautious outlook reflect the broader economic environment marked by consumer anxiety and a sluggish housing market, which together are putting pressure on home improvement demand. Shares of Home Depot and its rival Lowe’s both declined more than 2% following the earnings announcement. In summary, Home Depot faces headwinds from a combination of fewer storm-related sales boosts, subdued consumer spending, and a housing market stuck in a slump. While revenue growth is steady, profit margins are tightening, and the company’s outlook reflects cautious optimism tempered by economic challenges that could persist through 2025.