The third quarter was disappointing for Home Depot, with earnings falling short of the prior-year period, but comparable and net sales making some progress.
Net earnings for the third quarter of fiscal 2025 were $3.6 billion, or $3.62 per diluted share, compared with net earnings of $3.65 billion, or $3.67 per diluted share, in the year-previous period. Adjusted for one-time events, diluted earnings per share were $3.74, the company noted, versus $3.78 in the same period of fiscal 2024.
A Zacks Investment Research analyst consensus estimate called for earnings per adjusted diluted share of $3.81 and revenue of $40.99 billion.
Comparable sales increased 0.2% in the quarter year over year, as comps in the United States gained 0.1%, Home Depot reported. Net sales were $41.35 billion, up 2.8% from the year-earlier quarter. Net sales included $900 million resulting from the recent acquisition of specialty building products supplier GMS. Operating income was $5.35 billion versus $5.42 billion in the year-prior quarter, while adjusted operating income was $5.51 billion versus $5.56 billion.
Home Depot now expects total sales growth of 3% for the current fiscal year, with comps to be slightly positive and adjusted diluted earnings per share to decline 5% from the $15.24 posted a year ago. Previously, the company’s outlook was for total sales growth of 2.8%, comparable sales growth of 1% and adjusted diluted earnings per share to decline 2% year over year, from $15.24.
In a conference call, Billy Bastek, Home Depot executive vice president, merchandising, said the best performing product categories in the quarter were appliances, kitchen, storage, outdoor garden, bath, electrical, plumbing, millwork, and hardware. He added that the comp average ticket increased by 1.8% while comp transactions decreased by 1.6%.
“The growth in comp average ticket primarily reflects a greater mix of higher ticket items, customers continuing to trade up for new and innovative products as well as modest price increases,” Bastek said. “Big ticket comp transactions, those over $1,000, were positive 2.3% compared to the third quarter of last year.”
However, he added that demand for discretionary products and projects that typically require financing remains soft.
Online sales advanced 11% compared to last year’s third quarter, Bastek said.
In announcing the financial results, Ted Decker, Home Depot chair, president and CEO, said, “Our results missed our expectations primarily due to the lack of storms in the third quarter, which resulted in greater than expected pressure in certain categories. Additionally, while underlying demand in the business remained relatively stable sequentially, an expected increase in demand in the third quarter did not materialize. We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand. Our teams are continuing to execute at a high level, and we believe we are growing our market share.”
