Home Depot flags fewer large remodels

Home Depot’s latest quarter offered a split view of the U.S. home-improvement market. The company said on May 19 that customers are still buying for smaller and seasonal projects, but are pulling back on larger remodeling jobs. Executives linked that caution to housing affordability pressure and broader macro uncertainty. The company also pointed to a more difficult operating backdrop that includes freight fuel costs and tariff-related issues discussed on its earnings call. ### If sales beat estimates, why are big remodels still weak? Home Depot reported first-quarter fiscal 2026 sales of $41.8 billion, up 4.8% from a year earlier, while comparable sales rose 0.6% and U.S. comparable sales increased 0.4%. Net earnings fell to $3.3 billion, or $3.30 per diluted share, from $3.4 billion, or $3.45 per diluted share, a year earlier. Ted Decker, Home Depot’s chair, president and chief executive, said the company’s underlying demand looked “relatively similar” to fiscal 2025 despite “greater consumer uncertainty and housing affordability pressure.” In the post-earnings call, Decker said customers appear to be in “reasonably good shape” but are hesitating on bigger projects. Reuters reported that he told investors, “The main thing is just this uncertainty that’s holding them back for taking on large projects.” (ir.homedepot.com) ### What does that say about the customer right now? Reuters said the company is seeing shoppers continue with purchases across a wide range of price points, from low-cost repair items to products costing more than $5,000, with an average basket of about $90. But the mix is shifting away from discretionary, large-scale remodels that often depend on home equity, financing or confidence in housing values. (ir.homedepot.com) Comparable customer transactions fell 1.3% in the quarter, while spending per visit rose about 2.2% to 2.3%, according to company results and Reuters. That combination suggests fewer trips but somewhat higher tickets. Reuters also said Home Depot has been leaning on its professional customer business to offset weaker demand from households for major projects. (money.usnews.com) ### Where do fuel costs and tariffs enter the picture? Home Depot executives told investors that elevated fuel costs are affecting both transportation and input expenses, according to Reuters’ account of the earnings call. Reuters also reported that executives said tariff refunds could offset some of that pressure and that the company had already received some refunds, without giving a figure. (ir.homedepot.com) The company’s earnings-call transcript also referred to a changing operating environment that included U.S. freight fuel costs and a Section 232 tariff. Home Depot did not change its full-year outlook in the earnings release, but the references show management is tracking policy and freight costs alongside consumer demand. (money.usnews.com) ### How did investors react? IBTimes reported that Home Depot shares fell 2.37% in pre-market trading on May 20 to $292.70 after closing at $299.81 the previous session. The report said investors were weighing a cooling housing market, high interest rates and possible tariff effects on the retailer. Home Depot itself reaffirmed fiscal 2026 guidance for total sales growth of about 2.5% to 4.5%, comparable sales growth of flat to 2.0%, and adjusted diluted earnings-per-share growth of flat to 4.0%. (cdn1.benzinga.com) That left investors to focus less on the headline beat and more on what management said about the backdrop for larger projects. (ibtimes.com.au) ### What should investors and homeowners watch next? May 20 and May 21 are the next key dates for retail investors following this theme. Reuters said Lowe’s is scheduled to report on May 20 and Walmart on May 21, giving the market two more large-company reads on U.S. consumer behavior. (ir.homedepot.com) Home Depot’s own next benchmark is the rest of fiscal 2026 guidance it reaffirmed on May 19, including comparable sales growth of flat to 2.0% and about 15 new stores. The company said a replay of its May 19 conference call is available through its investor relations site. (ir.homedepot.com) (money.usnews.com)