Home Depot struggles as earnings fall behind expectations

In the United States, Home Depot reported its fiscal second quarter earnings on August 19, 2025, revealing a mild increase in revenue but a slight decline in earnings per share compared to the same period last year. The home improvement giant earned $4.55 billion, or $4.58 per share, which was a decrease from $4.56 billion and $4.60 per share reported a year prior. Despite this dip, revenues climbed to $45.28 billion, a rise from $43.18 billion, though it fell short of analysts' expectations of $45.41 billion. The company's sales performance has been influenced by a shift in consumer behavior, with homeowners increasingly focused on smaller home improvement projects due to economic factors, including high borrowing costs and inflationary pressures. This change has impacted larger renovation undertakings, as many consumers have opted to postpone significant purchases amidst financial uncertainty. Comparable store sales in the U.S. rose 1.4%, indicating a specific segment of stability even as overall performance misses Wall Street targets. Home Depot's Chair and CEO, Ted Decker, stated that the company’s results aligned with internal expectations and reflected a continuation of momentum seen in previous quarters. While the company affirmed its overall sales growth forecast for the fiscal year, fears about the broader economic environment have kept many homeowners cautious, resulting in a decline in customer transactions, which fell less than 1%. Nevertheless, the average amount spent per receipt, now at $90.01, showed a slight increase from $88.90 the previous year, suggesting that those who are spending are potentially spending more on fewer items. The home improvement sector is currently navigating a challenging marketplace. Consumers have had to contend with high interest rates limiting their purchasing power and a slumping housing market. With mortgage rates at historically high levels, many are hesitant to engage in substantial renovation projects, opting instead for minor upgrades and maintenance tasks. As Home Depot continues to deal with these economic pressures, its strategic focus on customer service, product range, and competitive pricing may play a crucial role in maintaining its market position in an environment where price sensitivity among consumers is growing.