Photo by Julia A. Keirns on Unsplash
 

The Home Depot (NYSE: HD) released its third-quarter fiscal 2025 results, showing a mixed performance against market expectations. While the company managed to surpass revenue forecasts, its earnings per share fell short. Additionally, updated guidance for the fiscal year reflects ongoing challenges and strategic adjustments.
 

Q3 Revenue Lifted by GMS Acquisition Despite EPS Shortfall

Home Depot reported third-quarter fiscal 2025 sales of $41.4 billion, marking a 2.8% increase from the same period last year. This growth was bolstered by the acquisition of GMS Inc., contributing approximately $900 million to the total sales. The company’s comparable sales rose slightly by 0.2%, with U.S. comparable sales increasing by 0.1%. However, the net earnings for the quarter were $3.6 billion, translating to $3.62 per diluted share, a decrease from $3.67 in the previous year.

Despite the sales growth, Home Depot’s performance fell short of expectations in terms of earnings per share. The adjusted diluted EPS was $3.74, missing the anticipated $3.84. This shortfall was attributed to several factors, including a lack of storm activity that typically drives demand in certain categories. Additionally, the anticipated uptick in demand did not occur, reflecting consumer uncertainty and ongoing pressure in the housing market.

Ted Decker, the company’s chair, president, and CEO, acknowledged these challenges but expressed confidence in Home Depot’s market position. He emphasized the team’s high-level execution and the belief that the company is gaining market share despite the external pressures. The revenue beat, achieving $41.4 billion against an expectation of $41.18 billion, highlighted the company’s ability to drive growth even in a challenging environment.
 

Home Depot Lowers EPS Outlook as It Navigates Market Uncertainty

Looking ahead, Home Depot has updated its fiscal 2025 guidance to reflect the third-quarter results and anticipated challenges in the fourth quarter. The company now expects total sales growth of approximately 3.0%, with the acquisition of GMS projected to contribute around $2.0 billion in incremental sales. Comparable sales growth is anticipated to be slightly positive over the comparable 52-week period.

The company plans to open approximately 12 new stores and maintain a gross margin of around 33.2%. However, Home Depot expects a decline in diluted earnings per share by about 6.0% from $14.91 in fiscal 2024, with adjusted diluted EPS projected to decline by approximately 5.0% from $15.24. These projections account for ongoing pressures from consumer uncertainty, housing market challenges, and the absence of storm-driven demand.

Home Depot’s guidance also highlights strategic investments, with capital expenditures estimated at around 2.5% of total sales. The company aims to navigate the current market dynamics while focusing on long-term growth and operational efficiency. The updated guidance reflects a cautious yet optimistic approach, balancing short-term challenges with strategic initiatives for future success.

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