Home Depot misses on Q3 earnings; cuts full-year guidance
The Home Depot met analyst expectations for revenue, but after falling short of third quarter estimates, the company is scaling back its full fiscal year outlook.
The world's largest home improvement retailer reported net earnings for the third quarter of fiscal 2025 ended Nov. 2 of $3.6 billion, or $3.78 per share, down 1.3% from $3.6 billion, or $3.74 per dshare, in the same period of fiscal 2024.
Wall Street had predicted Home Depot would report adjusted earnings per share (EPS) of $3.83. Net sales rose 3% to $41.4 billion from $40.3 billion in the prior-year period. Total sales include approximately $900 million from the recent acquisition of GMS Inc. (GMS), which represents approximately eight weeks of sales in the quarter.
[READ MORE: Home Depot completes acquisition of GMS; deal valued at $5.5 billion]
Same-store sales for the third quarter of fiscal 2025 increased 0.2%, and same-store sales in the U.S. increased 0.1%. year-over-year.
"Our results missed our expectations primarily due to the lack of storms in the third quarter, which resulted in greater than expected pressure in certain categories,” said Ted Decker, chair, president and CEO, Home Depot. “In addition, while underlying demand in the business remained relatively stable sequentially, an expected increase in demand in the third quarter did not materialize. We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand."
Fiscal 2025 guidance scaled back
The company also lowered its full-year guidance to reflect its third-quarter performance, continued pressure in the fourth quarter from the lack of storm activity, ongoing consumer uncertainty and housing pressure, and the inclusion of GMS revenues.
The company also expects adjusted earnings-per-share to decline approximately 5% from $15.24 in fiscal 2024, revised from projection of approximately 2% decline. The Home Depot also expects to end its fiscal year with 12 new stores, down from previous forecast of 13 new stores.
In commentary emailed to Chain Store Age, David Silverman, senior director at Fitch Ratings, said Home Depot’s results and adjusted guidance align with a more cautious consumer and “somewhat slowing” retail spending and are not surprising.
"Fitch believes Home Depot has the appropriate scale, operating strategy and business mix to successfully navigate the current environment and fortify its position in the market," said Silverman. "The company can mitigate the impact of tariffs through supply chain shifts and vendor negotiations, and has also diversified its business mix toward professional customers and the maintenance and repair sectors, reducing its exposure to discretionary consumer projects."
At the end of the third quarter, The Home Depot operated a total of 2,356 retail stores and over 1,200 SRS locations across all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.
