The Home Depot reported fiscal Q4 2025 results that were modestly ahead of expectations, even as year-over-year comparisons were pressured by last year’s extra week and a still cautious consumer backdrop. Net sales declined 3.8 percent to $38.2 billion, though comparable sales edged up 0.4 percent, suggesting underlying demand stabilized late in the quarter. GAAP earnings came in at $2.58 per share, down from $3.02 a year ago, while adjusted EPS of $2.72 topped consensus estimates. Management pointed to steady engagement from core DIY customers and resilience in smaller projects, offset by continued softness in larger discretionary remodel activity tied to housing turnover.
Note: Home Depot FY'25 ended on February 1, 2026.
For 2026, the company projects total sales growth of approximately 2.5 % to 4.5 %, with comparable sales expected to be roughly flat to up about 2 %, underscoring an expectation of continued demand from routine maintenance and smaller projects even as larger renovation activity remains subdued. Home Depot plans to open about 15 new stores and expand its specialty retail services footprint, which should contribute to overall sales growth.
Operating margin is forecast at roughly 12.4% to 12.6%, with an adjusted margin of 12.8% to 13%, indicating some restraint in costs amid a still-challenging backdrop. The company is targeting an effective tax rate of around 24.3% and anticipates capital expenditures of around 2.5% of sales, consistent with its long-term investment levels. On profitability, Home Depot expects diluted EPS and adjusted EPS to grow roughly flat to 4% versus fiscal 2025, a pace that sits below some consensus estimates but reflects management’s cautious stance until housing turnover and big-ticket project demand materially improve.
Home Depot EBITDA Margin: The retailer saw a decrease in margins from 18% in 2021 tto 15.9% in 2025, due to weak comparable sales that limited operating leverage, a mix shift toward lower margin Pro and repair categories, and higher operating expenses tied to supply chain investments and acquisition integration.
Going forward, we expect the margins to decline modestly in the near term - as elevated interest rates and housing prices dampens consumer demand for large remodels and pricier projects - before growing back again to reach around 16.5% by the end of our forecast period. However, if the housing market and home improvement industry continue to strengthen, and outpace previously forecast growth estimates, and comps improve better than expected, resulting in the margins reaching 18%, there could be a 10% upside to our current price estimate.
Home Depot is the world's largest retailer of home improvement products. Home Depot has grown to 2,359 stores spanning across the U.S., Canada, and Mexico. It offers a wide range of home improvement products and installation services to individual homeowners as well as professional builders. The Home Depot stores average approximately 104,000 square feet of enclosed space, with approximately 24,000 additional square feet of outside garden area. In addition to the physical stores, consumers can buy these products through the company's dedicated website. It maintains a network of distribution and fulfillment centers, as well as several e-commerce websites in the U.S., Canada, and Mexico.
Home Depot and Lowe's are the number one and two home improvement retailers in the U.S. Home Depot outpaced Lowe's in terms of same-store sales growth, with better pricing except for 2020. Lowe's comparable sales of 26.1% managed to surpass Home Depot's comp sales of 19.7% in fiscal 2020. However, Lowe's comparable sales growth came in at 6.9%, whereas Home Depot recorded 11.4% growth in comparable sales in fiscal 2021. Continuing its growth trend, HD's comparable sales of 3.1% outpaced Lowe's -0.4% in FY 2022. In FY 2023, both companies saw negative comp sales with Lowe's comparable sales decreasing by 4.7% and Home Depot's comparable sales falling 3.2%. In FY 2024, HD's comp sales declined 1.8%. In FY 2025, HD's comp increased by about 0.3% compared to a flat growth for LOW. Both saw modest comparable-store sales gains in fiscal 2025 amid a challenging housing and consumer spending backdrop.
Still, Lowe's continues to reduce the gap with its largest competitor and gain market share in the fragmented home improvement industry, by improving sales through merchandising initiatives, enhancing profitability by improving store and operating capabilities, improving its digital penetration, and using its new loyalty program to attract more Pro customers.
Online retail has been an emerging threat to the market share of brick-and-mortar home improvement retailers like Home Depot and Lowe's. For this reason, both companies have made significant investments in online strategies, including small acquisitions and improvements in the web experience for their customers.
Home Depot’s supply chain transformation has centered on building out a market-based, interconnected distribution network designed to improve in-stock levels, reduce handling costs, and support both stores and digital fulfillment. The company’s Rapid Deployment Centers, or RDCs, are intended to aggregate purchase orders across multiple stores, receive bulk shipments from suppliers, and then quickly allocate product to individual locations. Home Depot operates roughly 18 mechanized RDCs across the U.S. and Canada. These facilities are designed for high velocity flow-through processing, and management has indicated that average turnaround time from receipt to outbound shipment to stores is about 24 hours, supporting faster replenishment and lower store-level complexity.
Stocking Distribution Centers, or SDCs, serve a somewhat different function. Home Depot operates more than 90 SDCs, which primarily replenish store inventory based on demand signals and forecasted needs. These facilities tend to hold inventory longer than RDCs and focus on case-pack and each-pick fulfillment. Processing times are generally slower than RDCs, often in the one to three day range, depending on volume and product category, which aligns with your characterization.
By centralizing purchasing, improving allocation accuracy, and reducing direct-to-store complexity, Home Depot aims to drive better in-stock performance, lower transportation and handling costs, and ultimately support operating margin expansion over time, assuming demand remains stable.
Professional demand remains a key pillar for the home improvement industry. Home Depot estimates its U.S. Pro addressable market at roughly $450 billion, at least as large as DIY, highlighting the segment’s structural importance.
In recent quarters, average ticket growth has outpaced transaction growth, with purchases above $1,000 rising at high single digit and at times double digit rates. While overall traffic has been muted, Pro sales have generally grown faster than company averages, supported by steady repair and maintenance activity. Categories such as building materials and fencing have shown relative resilience, helping offset softer discretionary DIY demand and underpinning near term industry stability.
Industry surveys, including research from the National Retail Hardware Association, suggest evolving buying patterns among U.S. home improvement consumers. Purchase decisions are increasingly driven by price, quality, and functionality rather than strict loyalty to the country of origin. As a result, retailers are expanding global sourcing to offer broader assortments and more competitive price points.
At the same time, demand for environmentally conscious products continues to rise. Categories such as water efficient plumbing fixtures, energy-efficient appliances, and LED lighting have benefited from growing consumer awareness, utility incentives, and stricter building standards. Together, these shifts are gradually reshaping the traditional home improvement product mix toward value-oriented and sustainability-focused offerings.
