MW Home Depot's says customers are still showing caution on large remodels

By Emily Bary and Ciara Linnane

Quarterly earnings beat is overshadowed by soft guidance as uncertain macroeconomic environment and high interest rates weigh

Home Depot Inc.'s chief executive said Tuesday that customers are still showing caution toward large remodeling projects, though the company benefited broadly from "greater engagement in home-improvement spend" during the fiscal fourth quarter.

CEO Ted Decker also called out "uncertain macroeconomic conditions and a higher interest rate environment that impacted home-improvement demand" in Tuesday's earnings release.

The company's outlook for the new fiscal year came up short, with Home Depot $(HD)$ projecting a 2% decline in adjusted earnings per share to $15.24, while analysts surveyed by FactSet were modeling $15.65.

That was enough to offset better-than-expected fourth-quarter earnings and a raised quarterly dividend. The stock fell more than 2% in premarket trade, before reversing those losses to trade flat.

Home Depot had net income of $3.03 billion, or $3.02 a share, for the quarter, up from $2.8 billion, or $2.82 a share, in the year-earlier period. Adjusted for one-time items, it had EPS of $3.13, ahead of the $3.04 FactSet consensus.

Sales rose 14.1% to $39.7 billion to top the FactSet consensus of $39.2 billion. Same-store sales, a key metric in retail that refers to stores open for at least 13 months, rose 0.8%, while FactSet was expecting a 2.0% decline.

The company raised its quarterly dividend by 2.2% to $2.30 a share, with the new dividend payable March 27 to shareholders of record as of March 13.

The company said it expects 2025 sales to rise about 2.8% and for same-store sales to rise about 1%. The FactSet consensus is for sales growth of 2.9% and for same-store sales to rise 1.7%.

Home Depot is expecting adjusted EBIT margins of about 13.4%, below the 13.8% consensus.

"if there's a source of weakness, it's that there was no operating margin upside on the stronger comps," BNP Paribas Exane analyst Chris Bottiglieri wrote in a note to clients. "For 2025, HD is guiding adjusted op. margins of 13.4%, which fell short of consensus expectations, and we suspect a primary driver of pressure to HD shares pre-market."

The company is expecting to open about 13 new stores in 2025.

The stock has gained 2.8% in the last 12 months, while the S&P 500 SPX has gained 17.6%.

-Emily Bary -Ciara Linnane

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 25, 2025 09:17 ET (14:17 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.