Home Depot Reports Stronger Sales As Smaller Home Projects O

Home Depot reaffirmed its full-year guidance after reporting nearly 5% sales growth during a quarter marked by economic uncertainty, elevated mortgage rates and geopolitical tensions.

The retailed said shoppers are delaying larger renovation projects while professional contractors continue driving growth.

Merin Rebecca Thomas
Published 05/19/26 AT 11:30 AM EDT Share on Facebook Share on Twitter Share on LinkedIn Share on Reddit Share on Flipboard Share on Pocket Home Depot has increasingly focused on expanding its professional business as consumers delay discretionary remodeling projects. Professional customers now account for roughly half of the company’s revenue. Brandon Bell/Getty Images

Home improvement retailer Home Depot reported stronger-than-expected quarterly sales as homeowners continued spending on repairs and smaller projects despite higher gas prices, stubborn mortgage rates and declining consumer confidence tied to ongoing geopolitical tensions.

The company posted fiscal first-quarter revenue of $41.77 billion, up nearly 5% from $39.86 billion a year earlier, while adjusted earnings came in at $3.43 per share. Analysts surveyed by LSEG had expected revenue of $41.52 billion and adjusted earnings of $3.41 per share. Net income fell to $3.29 billion, or $3.30 per share, from $3.43 billion, or $3.45 per share, a year earlier. The company reaffirmed its fiscal 2026 guidance, saying it still expects annual sales growth between 2.5% and 4.5%.

Chief Financial Officer Richard McPhail said the retailer's core homeowner customer remains financially stable even as consumers face higher fuel costs and broader economic concerns. "The homeowner in a relative sense is perhaps more protected financially than other customer cohorts and so we continue to see engagement," McPhail told CNBC. He added that shoppers are still postponing more expensive renovation work, saying customers "continue to tell us that they are going to defer their spend on larger projects."

The earnings report arrived as the housing sector continues to struggle with affordability issues and elevated borrowing costs. Mortgage rates had eased earlier this year before renewed conflict in the Middle East pushed oil prices and Treasury yields higher again, adding pressure across the housing market, according to Reuters.

Comparable sales at Home Depot increased 0.6% during the quarter, below analysts' expectations of 0.8%, while customer transactions declined 1.3%, marking the fourth consecutive quarterly drop in transactions. Gross margin also slipped to 33% from 33.8% a year earlier.

The company said professional customers, including contractors and builders, continued to support sales growth. Home Depot has increasingly focused on expanding its professional business as consumers delay discretionary remodeling projects. Professional customers now account for roughly half of the company's revenue.

Home Depot acquired SRS Distribution last year for $18.25 billion to strengthen its position in roofing, landscaping and pool supply distribution. The retailer also bought specialty building products distributor GMS. Last week, SRS completed its acquisition of HVAC distributor Mingledorff's, expanding Home Depot's reach in residential and commercial heating and cooling supplies. McPhail said those acquisitions are part of the company's push into what it estimates is a $700 billion professional contractor market.

"The underlying demand in our business was relatively similar to what we saw throughout fiscal 2025, despite greater consumer uncertainty and housing affordability pressure," CEO Ted Decker said in a company statement cited by the Associated Press.

Retail analysts and investors are closely watching large consumer chains this week for signs of how Americans are responding to inflation, high borrowing costs and uncertainty tied to global conflicts. Home Depot's results are among the first major retail earnings reports to provide insight into consumer behavior after rising oil prices linked to tensions involving Iran pushed fuel costs higher in recent weeks.

While homeowners continued spending on seasonal purchases and maintenance projects, larger categories tied to major renovations remained weak. The Wall Street Journal reported that lumber, flooring, lighting and millwork sales were softer during the quarter as customers avoided high-cost remodeling jobs.

Shares of Home Depot were down slightly in premarket trading following the earnings release. The company's stock had already fallen nearly 13% so far this year entering Tuesday's session, according to MarketWatch.