Home Depot posted net sales of $45.28 billion for its fiscal second quarter, rising from $43.18 billion in the same period last year. The result, however, came in just below Wall Street expectations of $45.41 billion. Comparable-store sales advanced 1 percent overall and 1.4 percent in the U.S., pointing to modest growth despite pressure on households from persistent inflation and high borrowing costs.
The retailer also reported that the average customer ticket increased slightly to $90.01, reflecting higher prices and incremental purchases. Transaction volume, meanwhile, declined by less than 1 percent, signaling that many households remain cautious about taking on larger or more costly projects. Analysts note that this consumer restraint is consistent with broader retail trends, where shoppers continue to prioritize essentials and smaller discretionary purchases.
Demand For Smaller Projects Supports Performance
Chief Executive Ted Decker said activity in smaller, do-it-yourself projects continued the shift that began late last year, when elevated interest rates and housing affordability challenges curbed demand for major renovations. Sales in categories such as paint, flooring, and garden products have provided a steady stream of business, offsetting weakness in high-ticket remodeling.
Industry analysts agree that Home Depot’s ability to adapt has helped it outperform competitors. Neil Saunders, managing director of GlobalData, emphasized that the company’s customer service standards, broad product selection, and competitive pricing make it a preferred choice for budget-conscious homeowners. He added that even in a tougher economic climate, Home Depot retains a dominant market share because of its reputation for reliability and its reach into both consumer and professional contractor markets.
Investors responded positively to the earnings update, with Home Depot shares climbing more than 4 percent following the announcement. Market observers viewed the rally as a sign of confidence in the retailer’s resilience and its ability to weather shifting consumer patterns.
Economic Headwinds Restrict Large-Scale Renovations
Despite overall sales growth, Home Depot continues to face headwinds in categories tied to large-scale home improvements. Elevated mortgage rates, which remain near multi-decade highs, have discouraged households from borrowing to fund expensive renovations. Projects such as kitchen and bathroom remodels or full-room renovations have been among the most affected, with many families postponing upgrades until borrowing conditions ease.
The slowdown is also linked to softness in the housing market, where elevated financing costs have reduced home sales and refinancing activity. With fewer households moving or investing in major improvements, demand for higher-value products such as appliances, cabinets, and building materials has been more muted. Broader economic uncertainty, including concerns about tariffs and potential cost pressures in the global supply chain, has further constrained long-term renovation plans.
Industry data shows that many consumers are opting to repair rather than replace, focusing on projects that maintain property value without significant debt exposure. Retailers across the sector have adjusted their strategies accordingly, increasing promotions on smaller-ticket items and seasonal goods while holding off on aggressive inventory buildup in categories tied to major construction.
Full-Year Outlook Reaffirmed Despite Mixed Results
Although Home Depot missed analyst expectations on earnings, reporting $4.68 per share against a forecast of $4.72, the company maintained its full-year guidance. Management expects total sales growth of approximately 2.8 percent, while adjusted earnings per share are projected to decline around 2 percent. Executives emphasized that the company’s diversified product portfolio and strong contractor relationships should allow it to navigate the evolving retail environment.
The decision to stand by its forecast contrasts with the caution expressed by some competitors, who have issued downward revisions in response to sluggish discretionary spending. Home Depot’s approach reflects confidence that consumer demand, even if shifting toward smaller projects, will be sufficient to sustain momentum. The stock’s post-earnings surge indicates that investors share this outlook, betting that the company’s scale and operational efficiency will preserve profitability in a period of economic volatility.
Market analysts also note that Home Depot could benefit from potential Federal Reserve interest rate cuts later in the year, which may relieve pressure on the housing sector and, in turn, stimulate demand for large renovation projects. Until then, however, the company appears poised to rely on steady consumer spending in lower-cost categories to maintain performance.