Home Depot’s (HD) stock slipped after its fourth quarter revenue slightly topped Wall Street’s low expectations on Tuesday.
In a slight improvement, the home improvement chain posted a 14.1% increase in revenue year-over-year to $39.70 billion. Adjusted earnings per share grew to $3.02, up from $2.82 last year but missing estimates of $3.04.
Home Depot has been struggling as shoppers held off on major renovation projects thanks to high interest rates and tighter wallets. That pressure is expected to continue, as total net sales are expected to grow 2.8% in fiscal year 2025, while a 1% increase in same-store sale growth is expected.
Shares fell more than 2% lower in pre-market trading after the release before the market open.
For the quarter, same-store sales growth was up 0.80%, where Wall Street had been looking for a drop of more than 1.71% to follow the previous eight straight quarters of negative growth. The rise was boosted by higher foot traffic, up 7.6%, and an uptick in the average ticket size, up 0.3%.
The results exceeded company expectations with “greater engagement in home improvement spend, despite ongoing pressure on large remodeling projects.” Home Depot CEO Edward “Ted” Decker said in the release.
In fiscal 2024, net sales grew 4.5% year-over-year to $159.51 billion, above Wall Street’s expectations. Same-store sales dropped for the full year, down 1.8%.
Here’s what Home Depot reported for its fourth quarter results, compared to Wall Street estimates:
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Revenue: $39.70 billion, versus $39.13 billion
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Adjusted earnings per share: $3.02, versus $3.04
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Same-store sales growth: 0.80%, versus -1.72%
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Foot traffic: +7.60%, versus -1.02%
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Average ticket size: +0.30%, versus -0.35%
Here’s what Home Depot reported for its full year results, compared to Wall Street estimates
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Revenue: $159.51 billion, versus $158.81 billion
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Adjusted earnings per share: $14.91, versus $15.12
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Same-store sales growth: -1.80%, versus -2.29%
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Foot traffic: +0.90%, versus -1.36%
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Average ticket size: -0.80%, versus -1.36%
Prior to the release, Wedbush analyst Seth Basham was optimistic that incremental sales were going to come from “hurricanes and wildfires related demand,” he told clients in a note. A solid holiday season, stronger appliance sales, higher lumber prices, and “possibly better demand for bigger ticket projects” were also tailwinds.
Tariffs will also be a top concern for Home Depot and rival Lowe’s (LOW), which reports earnings on Wednesday. The Trump administration recently imposed a 10% additional tariff on Chinese imports and a 25% tariff on steel, while the president signaled fresh tariffs on Canada and Mexico could come next week. Prospects of reciprocal tariffs on a slew of countries are also on the table.
The tariffs could increase costs, while any price hikes on retailers’ end may affect consumer demand.
“We source well more than half of our goods domestically and in North America, but there certainly will be an impact,” CEO Edward “Ted” Decker said in its third quarter earnings call. Investors expect to hear more on a call this morning at 9 a.m. ET.
Read more: Best credit cards for home improvement
“Given our scale, our experience going through the previous tariffs … I’d bet on this team’s ability to work with the type of suppliers we have to work through this in a differentiated manner than others in the industry.”
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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