Mixed quarter at Home Depot with less storm damage to homes and a more anxious shopper

Home Depot reported mixed third-quarter results Tuesday, facing headwinds from fewer storms, growing consumer anxiety, and a stagnant housing market. The retail giant saw its profits fall short of Wall Street expectations for the third consecutive quarter.

The Atlanta-based home improvement retailer earned $3.6 billion, or $3.62 per share, in the quarter ending November 2, down from $3.65 billion, or $3.67 per share, in the same period last year. Adjusted earnings of $3.74 per share missed analysts’ expectations of $3.84 per share, according to FactSet.

Home Depot CEO Ted Decker attributed the disappointing results primarily to “the lack of storms in the third quarter,” which typically drive sales of repair and rebuilding materials. “Additionally, while underlying demand in the business remained relatively stable sequentially, an expected increase in demand in the third quarter did not materialize,” Decker said in a statement.

Revenue rose 2.8% to $41.35 billion, slightly exceeding Wall Street projections of $41.15 billion. Comparable store sales, a key metric for retailers measuring sales at stores open at least a year, inched up just 0.2% overall and 0.1% in the United States.

The company’s stock fell 3% in early trading following the announcement. Shares of competitor Lowe’s, scheduled to report its quarterly results Wednesday, also dipped slightly.

Despite the revenue growth, customer transactions decreased by 1.4% during the quarter. The average receipt value rose slightly to $90.39 from $88.65 in the same period last year, indicating that while fewer customers visited stores, those who did spent more.

Neil Saunders, managing director of GlobalData, emphasized that Home Depot’s challenges were largely due to external factors rather than internal missteps. “The summer months were particularly challenging in this regard as consumers were actively making choices over how to spend their money, and home improvement took something of a back seat to experiences, travel, and personal indulgences,” Saunders noted.

In response to the continued challenges, Home Depot adjusted its fiscal 2025 outlook. The company now expects adjusted earnings to decline approximately 5% from fiscal 2024’s $15.24 per share, a more pessimistic forecast than its previous projection of a 2% decrease. However, the retailer raised its sales growth outlook to about 3%, up from its prior forecast of approximately 2.8%.

The revised guidance reflects the ongoing challenges in the housing market, which has been in a slump since 2022 when mortgage rates began climbing from historic lows. According to Redfin analysis, the U.S. home turnover rate—the number of homes sold divided by the total number of existing sellable properties—has fallen to its lowest level since at least the 1990s, with just 28 out of every 1,000 homes changing hands between January and September.

Despite current headwinds, David Silverman, senior director at Fitch Ratings, remains optimistic about Home Depot’s long-term position. “Home Depot has the appropriate scale, operating strategy and business mix to successfully navigate the current environment and fortify its position in the market,” he stated. Silverman believes the company can leverage supply chain adjustments and vendor negotiations to mitigate tariff impacts and benefit from its strategic pivot toward professional customers and maintenance sectors.

The company previously warned customers in August that some products might see modest price increases due to rising tariff costs, though executives emphasized that more than 50% of its products are sourced domestically and would be unaffected by tariffs.

As Home Depot navigates these challenges, the broader home improvement sector continues to feel the effects of cautious consumer spending and a housing market that remains significantly constrained by high mortgage rates and limited inventory.