Home Depot customers have the means to spend but remain cautious about taking on large home improvement projects due to concerns over inflation, fuel costs and broader economic uncertainty, CFO Richard McPhail said.
Speaking to CNBC after the retailer reported its fiscal second-quarter results, McPhail said customer engagement remained healthy in the first half, but consumers continued to delay bigger projects as uncertainty increased with the size of their spending commitments.
Home Depot reported better-than-expected results for the quarter, beating Wall Street estimates on both revenue and adjusted earnings. Adjusted earnings per share came in at $4.92, compared with expectations of $4.73, while revenue rose 5.7% year-on-year to $47.86 billion, ahead of the $47.27 billion expected.
Net income increased to $4.77 billion, or $4.79 per share, from $4.55 billion, or $4.58 per share, a year earlier. Comparable sales rose 1.7%, exceeding the 0.9% expected and marking the company's strongest comparable-sales performance since the fiscal third quarter of 2022.
Despite the strong quarter, Home Depot continues to operate in what McPhail described as “frozen housing market conditions”. Higher mortgage rates, lower housing turnover and economic uncertainty have prompted customers to postpone projects associated with buying new homes.
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McPhail said the company saw broad engagement across both its professional and do-it-yourself customer segments, but consumers have yet to return meaningfully to major projects.
Home Depot reaffirmed its fiscal 2026 guidance, forecasting total sales growth of 2.5%-4.5% and an operating margin of 12.4%-12.6%. The outlook includes tariff refunds expected to offset some higher fuel, energy and product input costs.
The company received $730 million in tariff refunds during the quarter, with $685 million used to reduce the cost of goods sold and the remaining $45 million reflected in inventory.
Home Depot is also continuing to focus on professional customers and invest in its business despite the weak housing environment. McPhail said the retailer is gaining market share among both professional and consumer customers.
Meanwhile, CEO Ted Decker is on a temporary medical leave expected to last a few months. Ann-Marie Campbell will oversee day-to-day operations, while McPhail will lead financial management and the professional business.
For Home Depot, the results underline a mixed consumer picture: shoppers remain financially capable and engaged, but inflation, fuel costs and uncertainty continue to discourage larger discretionary spending.
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