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Yahoo
23-05-2025
- Business
- Yahoo
Worried About Tariffs? Home Depot Says It Won't Raise Prices.
Home Depot reported a mixed first quarter, with EPS that came in below expectations. Management said that it would not raise prices because of tariffs. Home Depot's profit margins are higher than many competitors. 10 stocks we like better than Home Depot › Will they or won't they? That's the question on investors' and shoppers' minds alike as retailers start outlining their strategies to deal with tariffs. Walmart said last week that it would need to raise some prices, but it provided a broad outline of how it would seek to minimize the price hikes through redistributing its import bases, reworking packaging, and other actions. Home Depot (NYSE: HD), on the other hand, told investors during its first-quarter earnings report that it wouldn't raise prices. That was welcome news, considering all the other problems the company is having today. Let's take a deeper look at what's going on. Home Depot is a perennial winner and market beater, but it's experiencing strong external pressure from a variety of interconnected sources. The real estate industry is struggling through continued high interest and mortgage rates, leading to lower sales in the home improvement sector, and inflation is making it harder for customers to spend on anything extra. Home improvement is often a gray zone between essentials and discretionary spending. As the leader in the industry, Home Depot benefits from spending on what consumers can't avoid, but it feels the pinch in other categories. "People are painting again and working in their yards and doing smaller projects, but just have not engaged in the larger projects," CEO Ted Decker said during the first-quarter earnings call. The 2025 fiscal first quarter (ended May 4) was mixed, but in line with expectations. Sales increased 9.4% year over year, but comparable sales (comps) were down 0.3%. That means the growth is coming from new stores, of which there were three in the first quarter, and acquisitions, like SRS Distribution, which Home Depot purchased last year. Adjusted earnings per share (EPS) were $3.56, down from $3.67 last year and $0.04 below analyst expectations. Decker said that 50% of the company's merchandise is sourced in the U.S., and over the past few years, it's diversified its supply base so it's not reliant on any one country. He said that within the next 12 months, it will reach a level that no country outside the U.S. will be responsible for more than 10% of its purchases. Decker explained that the company has many levers to pull to offer a strong value proposition for customers even now, and that it's weathered many economic events in the past. He noted that for most homeowners, their house is their most expensive asset, and aging homes need work. Indeed, 55% of homes are at least 40 years old, and Home Depot is well-positioned to benefit from consumer spending. It's doing whatever it can to be the company to beat: upgrading its digital platforms, renovating its stores, investing in technology, and focusing on the consumer experience. To that end, Home Depot doesn't see the likelihood that it will need to increase many prices. It has an elastic model that can call up different supply lines, and it anticipates being able to cut out whatever products would require higher pricing. The company sees this as an exciting opportunity to capture market share from other retailers that don't have its scale and leverage. Although there's pressure, Home Depot still has high margins compared with other retailers. Walmart, for example, said it can't absorb tariffs because its profit margins are already low; about 2.4% today. Home Depot, on the other hand, enjoys a high profit margin compared to large retailers like Walmart, Costco Wholesale, and Target. Groceries have low margins, so this makes sense, but its profit margin is also higher than more similar companies like Lowe's and Floor & Decor. If Home Depot doesn't have to raise prices, it can grow its market share while keeping its margins healthy. Investors shouldn't get scared off because of short-term pressure. Home Depot's management is always finding ways to generate growth opportunities and become more efficient, and its approach to tariffs should boost investor confidence. The company purchased SRS last year to expand its market opportunity, which it sees as $1 trillion. And don't forget Home Depot's dividend. It yields 2.4% at the current price, and it's reliable and growing. All this means Home Depot is an excellent, all-weather choice for long-term value investors. Before you buy stock in Home Depot, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Home Depot wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $644,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $807,814!* Now, it's worth noting Stock Advisor's total average return is 962% — a market-crushing outperformance compared to 169% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Jennifer Saibil has positions in Walmart. The Motley Fool has positions in and recommends Costco Wholesale, Home Depot, Target, and Walmart. The Motley Fool recommends Lowe's Companies. The Motley Fool has a disclosure policy. Worried About Tariffs? Home Depot Says It Won't Raise Prices. was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Miami Herald
20-05-2025
- Business
- Miami Herald
Don't expect storewide price increases despite tariffs, Home Depot says
Home Depot on Tuesday reported sales growth in its fiscal first quarter as consumers continued to show resiliency in the face of the trade war, but growth for existing stores in the U.S. was soft, a sign consumers continue to be guarded in making big purchases. As other retailers have pared back or put on pause their earnings expectations, the Georgia-based retail giant kept its guidance in place, saying Tuesday it still expects sales across its footprint to grow 2.8% for the fiscal year. Executives also said they did not expect widespread price increases on products as the company has worked to diversify where it buys inventory and find cost savings elsewhere. The people who tend to shop at Home Depot - largely homeowners and the contractors who serve them - have faced the uncertainties of the trade war, undulations in the stock market and high interest rates that have made borrowing for big projects and homebuying more difficult. The trade war has challenged businesses in figuring out purchasing, managing inventory and how to plan, and economists have warned the import taxes are likely to lead to inflation. Home Depot, given its place in the retail world, is a bellwether for the broader economy, and its performance offers clues to how homeowners and contractors are faring. The worst appears to be in the rearview mirror, Home Depot Chairman, President and CEO Ted Decker said in a conference call with investors and analysts. President Donald Trump has pulled back from his maximalist positions on tariffs - though U.S. tariff rates remain high - and the stock market has bounced back from a dreadful April as consumer and business sentiment plummeted. The average Home Depot customer has an income of $110,000 and 80% are homeowners, Decker said. "Our customer is in a good spot right now," he said. Home construction remains constrained, and homeowners have huge amounts of home equity that they could borrow against. Still, consumers are cautious. Faced with persistently high interest rates, homeowners have remained skittish to start big projects. But the nation's housing inventory is aging, increasing the need for maintenance and upgrades. Decker said that means consumers could come off the sidelines as the retailer heads deeper into spring and into the summer, which executives call the "Super Bowl" season for the world's largest home improvement retailer. "We remain bullish on the fundamentals of home improvement, and we are confident we are best positioned to win," Decker said. 'Because of our scale' Home Depot said its sales grew 9.4% to $39.9 billion in the quarter that ended May 4. A big part of that growth came from its purchase last year of SRS Distribution, a business that serves residential contractors. The company also opened three stores in the quarter. Net income in the quarter was $3.4 billion, down about 5% from the same period last year. When counting stores open at least a year, sales across Home Depot's network dipped 0.3% in that time, while sales at U.S. existing stores grew a modest 0.2%, the company said. Foreign currency rates played a role in the dip in international same store sales. Home Depot said the quarter met its internal expectations, though Bloomberg reported its earnings missed Wall Street expectations. Poor weather in the northern U.S. and Canada also played a role in sales softness, but sales appear to be rebounding in the early weeks of the company's second fiscal quarter, executives said on the conference call. While measures of inflation have remained low as Trump slapped tariffs on countries worldwide, retailers have warned price increases could soon begin to appear in stores and online. Walmart executives last week said that despite efforts to keep prices low and absorb costs, Trump's import taxes would force it to raise prices. That triggered a harsh response from Trump on social media, who said the company should "EAT THE TARIFFS." Home Depot executives on Tuesday's call highlighted the company's efforts over the years to diversify its supplier base. More than half the products in its stores are sourced from the U.S., and executives said that within the next 12 months, no country outside the U.S. will be the origin of more than 10% of its goods. "Because of our scale, the great partnerships we have with our suppliers and productivity that we continue to see in our business, we intend to generally maintain our current pricing levels across our portfolio," Home Depot Chief Financial Officer Richard McPhail said. Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
Yahoo
20-05-2025
- Business
- Yahoo
Home Depot beats sales estimates on stable demand, maintains forecast
(Reuters) -Home Depot beat Wall Street estimates for first-quarter sales on Tuesday as the world's largest home improvement retailer enjoyed resilient demand from professional contractors and small-scale repair works by existing homeowners. Shares of the Atlanta-based retailer jumped more than 2% in premarket trading as the company also kept its fiscal 2025 forecast unchanged, with a sales growth target of 2.8%. Home Depot has benefited from demand for tools used in do-it-yourself house projects, repair and maintenance ahead of the spring season, even as budget constraints weighed on larger home renovation activities. It has also capitalized on demand from its professional customer base, including contractors, by increasing investment in its supply chain after acquiring Texas-based SRS Distribution last year. "....We saw continued customer engagement across smaller projects and in our spring events," CEO Ted Decker said in a statement. Home Depot will not raise prices because of U.S. tariffs, CFO Richard McPhail told CNBC in an interview. Reuters could not immediately verify the information independently. The company sources less than half of its goods from outside North America, and has said it has reduced exposure to China in recent years. In February, Home Depot indicated it was well-placed to manage any impact from tariffs. Its foreign manufacturing hubs include Mexico, Canada, China, India, Vietnam, Taiwan and Europe. The company posted net sales of $39.86 billion for the quarter ended May 4, a 9% jump from last year. Analysts on average had expected an 8% rise to $39.31 billion, according to data compiled by LSEG. Sign in to access your portfolio
Reuters
20-05-2025
- Business
- Reuters
Home Depot beats quarterly sales estimates on stable demand
May 20 (Reuters) - Home Depot (HD.N), opens new tab beat Wall Street estimates for first-quarter sales on Tuesday as the world's largest home improvement retailer enjoyed resilient demand from professional contractors and small-scale repair works by existing homeowners. The Atlanta-based retailer has benefited from demand for tools used in do-it-yourself house projects, repair and maintenance ahead of the spring season, even as budget constraints weighed on larger home renovation activities. Home Depot has also capitalized on demand from its professional customer base, including contractors, by increasing investment in its supply chain after acquiring Texas-based SRS Distribution last year. The retail chain kept its fiscal year 2025 forecast unchanged, with a total sales growth target of 2.8%. Shares of the company were up about 2% in premarket trading. "....We saw continued customer engagement across smaller projects and in our spring events," CEO Ted Decker said in a statement. The company posted net sales of $39.86 billion for the quarter ended May 4, a 9% jump from last year. Analysts on average had expected an 8% rise to $39.31 billion, according to data compiled by LSEG.
Yahoo
20-05-2025
- Business
- Yahoo
Home Depot beats quarterly sales estimates on stable demand
(Reuters) -Home Depot beat Wall Street estimates for first-quarter sales on Tuesday as the world's largest home improvement retailer enjoyed resilient demand from professional contractors and small-scale repair works by existing homeowners. The Atlanta-based retailer has benefited from demand for tools used in do-it-yourself house projects, repair and maintenance ahead of the spring season, even as budget constraints weighed on larger home renovation activities. Home Depot has also capitalized on demand from its professional customer base, including contractors, by increasing investment in its supply chain after acquiring Texas-based SRS Distribution last year. The retail chain kept its fiscal year 2025 forecast unchanged, with a total sales growth target of 2.8%. Shares of the company were up about 2% in premarket trading. "....We saw continued customer engagement across smaller projects and in our spring events," CEO Ted Decker said in a statement. The company posted net sales of $39.86 billion for the quarter ended May 4, a 9% jump from last year. Analysts on average had expected an 8% rise to $39.31 billion, according to data compiled by LSEG. Sign in to access your portfolio
