Home Depot released a strategic update that reaffirmed its fiscal 2025 guidance and introduced a preliminary outlook for fiscal 2026. The company reiterated a 3% total sales growth target for fiscal 2025, slightly positive comparable sales, a 33.2% gross margin, and a 12.6% operating margin, while projecting a 6% decline in diluted earnings per share (EPS) from the prior year.
Fiscal 2025 guidance is anchored to a fiscal 2024 backdrop of $159.514 billion in total sales, a diluted EPS of $14.91, and an adjusted diluted EPS of $15.24. The 6% EPS decline reflects a normalization after a strong 2024, driven by higher cost inflation and a shift in product mix toward lower‑margin DIY categories, while the company maintains a 12.6% operating margin target despite a 0.8‑percentage‑point compression from the 13.4% margin seen in fiscal 2024.
The preliminary fiscal 2026 outlook presents a cautious baseline: comparable sales are expected to be flat to 2%, total sales growth 2.5% to 4.5%, operating margins 12.4% to 12.6%, and diluted EPS flat to 4%. A market‑recovery case assumes 5% to 6% sales growth, 4% to 5% comparable sales, and higher operating profit growth, signaling upside if housing activity rebounds.
The guidance reflects several headwinds. High interest rates are curbing big‑ticket spending, while consumer uncertainty and the lack of storm‑related demand in Q3 2025 have dampened home‑improvement purchases. The company’s focus on the professional contractor platform remains, but the pro segment’s growth is tempered by a 1.3% decline in comparable sales in Q3 2024 and a modest 0.2% increase in Q3 2025, indicating a gradual shift back to DIY demand. The acquisition of GMS Inc. added roughly $900 million in sales in Q3 2025, offsetting some of the softness in the core business.
Management emphasized confidence in long‑term positioning. CEO Ted Decker said the company’s investments in a frictionless interconnected experience and the “Complex Pro” strategy strengthen its competitive advantage in a $1.1 trillion addressable market. CFO Richard McPhail noted that housing‑market pressures are expected to correct, allowing Home Depot to grow faster than the broader economy if the recovery materializes.
Investors reacted to the cautious fiscal 2026 outlook, with the market focusing on the flat comparable‑sales projection and the modest growth range. The company’s guidance signals a measured view of near‑term demand while maintaining confidence in its strategic initiatives and margin discipline.
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