Shares of The Residence Depot (NYSE: HD) dropped 1% on Wednesday. The inventory has dropped 6% up to now three months. The house enchancment retailer delivered combined outcomes for the primary quarter of 2025 because it continues to face an unsure macroeconomic surroundings. Nonetheless, the corporate stays assured that it might navigate this present panorama.
Q1 efficiency
Within the first quarter of 2025, Residence Depot’s gross sales elevated 9.4% to $39.9 billion in comparison with the identical interval a 12 months in the past. Comparable gross sales declined 0.3%. Adjusted earnings decreased 3% year-over-year to $3.56 per share.
Navigating challenges
Throughout the first quarter, Residence Depot noticed customers have interaction in smaller residence transforming actions and spring initiatives however bigger transforming initiatives stay pressured by increased rates of interest. Discretionary initiatives like kitchen and bathtub remodels, which often require financing, continued to see softer engagement. The corporate stays optimistic on spring-related demand persevering with within the second quarter.
HD believes it’s well-positioned to navigate the present macroeconomic surroundings, with huge alternative in a extremely fragmented market and a wholesome shopper with secure jobs and wages. The appreciation in residence costs together with an ageing housing inventory, which would require upkeep and updates, provides it additional confidence.
Residence Depot continues to see sturdy efficiency from SRS, which generated $2.6 billion in gross sales for the primary quarter. SRS delivered better-than-expected progress in its essential verticals and continues to realize share. Additionally it is yielding positive factors within the Professional section. Residence Depot expects SRS to ship mid-single-digit gross sales progress for fiscal 12 months 2025.
Residence Depot believes it has important flexibility by way of its sourcing technique. At present, over 50% of its purchases are sourced in the USA. The corporate has been working to diversify its world provide chain and it anticipates {that a} 12 months from now, no single nation outdoors the US will characterize greater than 10% of its purchases. In opposition to this backdrop and the present tariff scenario, Residence Depot doesn’t plan to extend its costs, while seeing alternative to realize share on this surroundings.
Outlook
Residence Depot expects whole gross sales to develop approx. 2.8% in fiscal 12 months 2025. Comparable gross sales are anticipated to develop approx. 1% for the comparable 52-week interval. Adjusted EPS is projected to say no approx. 2% YoY.
