High interest rates have impacted demand for large-scale home remodeling projects in Q4 2025 for Home Depot (HD, Financial). Despite this, the company reported a strong performance, surpassing both top and bottom-line expectations. Notably, Home Depot achieved positive comparable sales growth of 0.8% for the first time in two years.

Though Home Depot provided conservative EPS and revenue guidance for FY25, the market seems to believe this outlook is overly cautious. The company's comparable sales forecast of approximately 1.0% growth suggests stagnation, which appears unlikely given the positive momentum in both the DIY and Pro segments.

• In Q4, both DIY and Pro segments posted positive comparable sales, with Pro outperforming. Key growth areas included decking, concrete, and gypsum on the Pro side, and appliances, lumber, and building materials in DIY. Big-ticket transactions (over $1,000) rose by 0.9% year-over-year, indicating increased consumer spending. Overall, the average ticket rose by 0.2%, and transactions grew by 0.6%.
• Home Depot is capturing a larger market share in home improvement retail, thanks to its superior interconnected shopping experience. The company highlighted its fastest-ever delivery speeds and strategic in-store investments in technology and inventory as competitive advantages.
• The Pro business benefits from the acquisition of SRS Distribution, which supplies roofing, landscaping, and pool installation materials. Since the acquisition, SRS has contributed $6.4 billion in sales, and Home Depot expects mid-single-digit organic sales growth for SRS in FY25.
• Large discretionary projects, like kitchen and bath remodels, remain a weak spot due to high-interest rates, which are expected to persist in 2025.

While high interest rates continue to challenge Home Depot in the housing market and large remodeling projects, the company's overall business remains robust. Positive sales trends in both the DIY and Pro segments suggest potential for improved results this year, despite ongoing interest rate challenges.