Home Depot (HD) Q3 2025 earnings
Home Depot It cut its full-year profit forecast on Tuesday, missing Wall Street’s earnings expectations for a third straight quarter, citing weak home improvement demand, moderate consumer spending and lower-than-normal storm activity.
The retailer said it now expects full-year sales to rise about 3% and comparable sales, which strip out the impact of one-off factors such as store openings and calendar differences, to be slightly positive. This compares with its previous expectations for full-year sales to rise 2.8% and comparable sales to rise 1%.
The revised outlook includes an estimated $2 billion in additional revenue from GMS, the building products distributor Home Depot acquired earlier this year. The company’s sales were not part of the previous full-year forecast.
Home Depot expects full-year adjusted earnings per share to fall about 5% from a year earlier, compared to its previous expectations that it would fall about 2%.
In an interview with CNBC, Chief Financial Officer Richard McPhail said the retailer had previously expected home renovation activity to increase. Additionally, sales of roofing materials, generators and other supplies that are typically sold before and after seasonal storms are also projected to increase.
He said neither dynamic occurred and put pressure on the business.
“When we set the guidance, we anticipated that demand would begin to gradually accelerate in the back half of the year as interest rates and mortgage rates decline,” he said. “But what we saw was that ongoing consumer uncertainty and continued pressure on housing were disproportionately impacting demand for home improvement.”
Here’s how Home Depot compares to Wall Street’s estimates for its fiscal third quarter, according to a survey of LSEG analysts:
- Earnings per share: $3.74, expected $3.84
- Revenue: $41.35 billion, expected $41.11 billion
Shares of Home Depot fell nearly 2% in premarket trading Tuesday. As of Monday’s close, the company’s shares were down about 8% so far this year. This follows the S&P 500’s 13% gain in the same period.
For Home Depot, housing turnover often triggers larger, more lucrative projects as customers fix up their homes before or after moving. But the frequency of these large projects has decreased as higher interest rates have led to higher mortgage rates and borrowing costs for loans the homeowner might use for a kitchen remodel or large addition.
Since about mid-2023, McPhail told CNBC that homeowners have been in a “procrastination mindset.” This has led to a bit of a waiting game as Home Depot waits for either lower mortgage rates or a change from consumers who have become accustomed to higher mortgage rates as the new normal.
That waiting game continued in the last three months. McPhail told CNBC that demand was “stable” from the second to third quarters of the fiscal year when adjusting for the lack of hurricanes.
But he added: “It is difficult to identify short-term catalysts that will lead to acceleration at this point.”
Home Depot’s net income for the three months ended Nov. 2 fell to $3.60 billion, or $3.62 per share, from $3.65 billion, or $3.67 per share, in the same quarter a year ago. Revenue was down from $40.22 billion in the same quarter a year ago.
The average ticket, which is the typical amount customers spend in-store or on the company’s website, rose 1.8% year over year in the quarter. However, customer transactions fell 1.6% year over year.
McPhail said the bright spot in the quarter was online sales, which rose 11% year over year.
Compared to other major retailers, Home Depot’s customers tend to be more financially stable. Nearly 90% of do-it-yourself customers own homes, and home professionals who shop at the retailer are often hired by homeowners.
Even so, McPhail said Home Depot’s weak outlook is partly due to customers across income brackets being reluctant to take on high-dollar projects. He said the slowing housing market and high cost of borrowing have contributed to this trend.
Other factors, such as a prolonged government shutdown, an increase in corporate layoff announcements and a decline in home values in some markets, could also have a chilling effect, he said.
The company has tried to attract more business from contractors, roofers and other professionals as do-it-yourself customers put off larger projects.
The company has made two significant acquisitions from pro-government companies. Last year, it made the largest acquisition in its history by purchasing Texas-based SRS Distribution for $18.25 billion. The company sells supplies to professionals in the landscaping, pool and roofing trades. Earlier this year, Home Depot announced it would acquire GMS.
Like other retailers, Home Depot has experienced higher costs on some imported products due to tariffs. McPhail said in May that the company was diversifying the countries from which it sources its products and aims to “generally maintain our current level of pricing across our portfolio.”
But company leaders warned in August that it might have to raise prices in some categories because of higher tariffs.
McPhail told CNBC that Home Depot has increased prices on some products, but “where there have been price movements, they have been modest.”
He said Home Depot keeps prices the same on some major items or may even lower them. For example, the price of the best-selling 1.5-metre Grand Duchess Christmas tree and many strings of lights for trees has fallen, he said.
