Home Depot maintains guidance as US spending holds up

Boston Globe

20-05-2025

'Our consumers are still telling us that the rate environment remains a consideration, and they tell us they are deferring larger projects for now,' he said, adding that consumer habits remain steady. About 80 percent of Home Depot's customers own homes.
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The company maintained its full-year forecast, which includes the impact of tariffs. Comparable sales were hit by foreign exchange rates, and earnings missed Wall Street expectations.
Shares rose 2 percent at 7:10 a.m. in early New York trading. The stock has dropped 2.5 percent so far this year, lagging the performance of the S&P 500 Index.
Home Depot had previously signaled an optimistic outlook, but President Donald Trump's fast-changing tariffs have created hurdles and uncertainty.
Across the US, prices are expected to rise due to new levies, and consumer sentiment has deteriorated in recent months on fears of an economic fallout. Abrupt changes in trade policy are also making it more challenging for companies to manage their inventories, forecast demand and plan long-term.
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After posting strong quarterly results last week, Walmart Inc. cautioned that tariff-driven price increases are only starting to come into effect. The company reiterated plans to keep prices low, though it said it wouldn't absorb all cost pressures given the magnitude of levies.
That drew the ire of Trump, who took to social media over the weekend to say the retailer should 'eat the tariffs.' In response, Walmart said it has kept prices as low as possible and would continue to do so.
The quarrel didn't change Home Depot's calculus around prices, McPhail said. The company will continue to focus on its strategy to diversify its supply chain.
Home Depot says it sources more than 50 percent of its products in the US. In 12 months, it expects no country outside the US to represent more than 10 percent of its purchases. That will help the retailer to generally keep its current level of pricing, McPhail said, along with efforts to be more efficient across its supply chain.
Over the past two years, Home Depot and other housing-focused companies have posted weak sales against the backdrop of high interest rates. Elevated rates have prompted consumers to defer home purchases or projects that need financing, instead prioritizing necessities.
The home category is especially vulnerable to tariffs because many products are sourced from overseas, according to industry consultants. They also tend to be discretionary, meaning demand is closely tied to prices. US homebuilder sentiment slumped in May to the lowest level since 2023, as tariffs make it more difficult to price homes and anxious consumers stayed on the sidelines.
The retailer is investing to expand its offerings for professional contractors who handle larger, more complex projects, as it broadens digital operations and doubles down on exclusive products.
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Some consumer-facing companies have posted soft reports in recent weeks due to economic disruptions. Floor & Decor Holdings Inc., Procter & Gamble Co. and others slashed their annual outlooks, while airlines have voiced concerns about waning consumer confidence.
Other big-box retailers, including Target Corp. to Lowe's Cos., are set to post quarterly reports this week, offering more color on the health of US shoppers. Economists, analysts and executives are looking for clues on when prices will rise from tariffs, by how much and for how long.