Home Depot reported mixed fourth quarter earnings results as the home improvement retailer continues to navigate consumer uncertainty in the housing market. The company’s revenue declined year-over-year, though adjusted earnings per share exceeded Wall Street expectations. The Home Depot earnings report revealed ongoing challenges in consumer spending patterns, despite some bright spots in overall performance.
According to the company’s latest financial release, fourth quarter revenue fell 4% to $38.2 billion, slightly below the $38.3 billion analysts had forecasted, based on Bloomberg consensus data. However, adjusted earnings came in at $2.72 per share, beating estimates of $2.55 per share. Overall same-store sales grew 0.4%, outperforming the anticipated 0.4% decline.
Home Depot Earnings Driven by Higher Ticket Prices
The quarterly results were primarily driven by higher average transaction values, though the company experienced a decline in the total number of customer transactions. This trend suggests consumers are making fewer trips to Home Depot stores but spending more per visit when they do shop. The pattern reflects broader shifts in consumer behavior amid economic uncertainty.
CEO Ted Decker addressed the company’s performance in the earnings release, noting that results aligned with internal expectations. “For the fourth quarter, our results were largely in-line with our expectations, reflecting the lack of storm activity in the third quarter and ongoing consumer uncertainty and pressure in housing,” Decker stated. He added that adjusting for storm-related impacts, underlying demand remained relatively stable throughout the year.
Stock Performance and Market Reaction
Investors responded positively to the Home Depot earnings announcement, with shares rising nearly 3% in premarket trading. The stock has gained approximately 10% year-to-date, significantly outperforming the S&P 500, which has remained flat during the same period. The positive market reaction suggests confidence in the retailer’s ability to navigate challenging market conditions.
Additionally, the company’s full fiscal year performance exceeded analyst expectations across key metrics. Revenue reached $164.68 billion, slightly above the $164.59 billion forecasted by Wall Street. Adjusted earnings of $14.69 per share also topped the $14.53 expected, while same-store sales growth of 0.3% surpassed the anticipated 0.2% increase.
Housing Market Uncertainty Impacts Retail Performance
The ongoing pressure in the housing market continues to weigh on home improvement spending, according to company leadership. Consumer hesitation reflects broader concerns about mortgage rates, home prices, and economic conditions. These factors have created a challenging environment for retailers dependent on housing-related purchases and renovation projects.
Meanwhile, the absence of significant storm activity in the third quarter also impacted fourth quarter results. Storm-related repairs and replacements typically drive increased demand for home improvement products and services. The lack of such weather events contributed to softer overall revenue performance during the period.
Outlook and Forward Guidance
For the current fiscal year, Home Depot reiterated the guidance it previously shared during its December investor day. The company expects total sales growth in the range of 2.5% to 4.5%, with same-store sales projected to range from flat to up 2%. These projections reflect cautious optimism about gradual improvement in market conditions.
In contrast to revenue expectations, earnings guidance suggests potential margin pressure ahead. Adjusted earnings for the year are expected to range from flat to up 4.0% compared to the $14.69 per share posted in the previous fiscal year. This narrower earnings growth projection compared to sales growth indicates the company anticipates continued cost pressures.
The company has not announced specific timing for its next earnings report or provided additional details on initiatives to address housing market headwinds. Investors will likely monitor housing market indicators and consumer spending trends in the coming quarters to assess the retailer’s ability to meet its fiscal year guidance.
