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HOME DEPOT, INC. (HD)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 results were mixed: sales beat consensus while EPS was slightly below. Net sales were $39.86B (+9.4% YoY), above S&P Global consensus of $39.25B; adjusted EPS was $3.56 vs. $3.589 consensus, and GAAP EPS was $3.45 . EBITDA was ~$6.13B vs. $6.15B consensus, a slight miss . FX was a notable headwind (~70 bps of comps, ~$275M revenue impact) .
  • Management reaffirmed FY2025 guidance: ~2.8% sales growth, ~1.0% comp growth, ~33.4% gross margin, ~13.0% operating margin (13.4% adjusted), ~24.5% tax rate, ~$2.2B net interest expense, EPS down ~3% (adjusted EPS down ~2%), capex ~2.5% of sales, ~13 new stores .
  • Operating trends: comps -0.3% with U.S. comps +0.2%; transactions +2.1% and average ticket flat; Pro outpaced DIY; online comp +~8%; big-ticket transactions +0.3%; softness persists in larger, financed remodel projects; weather favored March/April and Easter shift aided March .
  • Mix headwinds from SRS weighed on margins (gross margin 33.8% and operating margin 12.9% in Q1; adjusted OM 13.2%), partially offset by lower shrink and supply chain productivity; SRS delivered $2.6B sales in Q1 and remains a share-gain engine .
  • Strategy/catalysts: robust Pro ecosystem expansion (trade credit onboarding, order management rollout), AI tools (Magic Apron) boosting digital conversion, and sourcing diversification to mitigate potential tariff impacts without broad price hikes (supports share gains) .

What Went Well and What Went Wrong

What Went Well

  • Sales beat and U.S. comps positive: Net sales $39.86B (+9.4% YoY) with U.S. comps +0.2% and transactions +2.1%; CEO: “continued customer engagement across smaller projects and in our spring events” .
  • Digital and service momentum: Online comp +~8% with fastest-ever delivery speeds; generative AI “Magic Apron” improving online conversion . CFO cited supply chain productivity and improved shrink as offsets to mix pressure .
  • Pro ecosystem traction: Pro comps positive and outpaced DIY; SRS delivered $2.6B in Q1 and exceeded expectations; trade credit program onboarding accelerating larger baskets .

What Went Wrong

  • EPS/margin pressure: Adjusted EPS $3.56 missed consensus; operating margin fell to 12.9% (13.2% adjusted) on SRS mix and natural deleverage; gross margin declined ~35 bps YoY to 33.8% *.
  • Macro/FX headwinds: Comps -0.3% impacted by ~70 bps FX headwind and unfavorable weather in February; CFO quantified ~$275M top-line FX pressure .
  • Large project softness persists: Higher rates and uncertainty continue to defer larger, financed remodels (kitchen/bath), limiting big-ticket acceleration despite some categories improving .

Financial Results

Income Statement and Margins (oldest → newest)

MetricQ3 2025Q4 2025Q1 2026
Revenue ($B)$40.20 $39.70 $39.86
Gross Margin %33.4% 32.8% 33.8%
Operating Margin %13.5% 11.3% 12.9%
Adjusted Operating Margin %13.8% 11.7% 13.2%
Diluted EPS (GAAP)$3.67 $3.02 $3.45
Adjusted EPS$3.78 $3.13 $3.56

Notes:

  • Q4 FY2025 benefited from hurricane-related sales (~$220M) and had a 53rd week effect; gross margin pressure largely SRS mix .
  • Q1 FY2026 gross margin decline vs. prior year reflects SRS mix, partially offset by shrink/supply chain productivity; adjusted OM excludes intangible amortization .

KPIs and Operating Drivers (Q1 FY2026)

KPIQ1 2026
Total Company Comps-0.3% (U.S. +0.2%); FX -70 bps to comps
Customer Transactions (M)394.8 (+2.1% YoY)
Average Ticket$90.71 (flat YoY)
Online Comp Sales~+8% YoY
Big-Ticket Transactions (> $1,000)+0.3% YoY
Pro vs. DIYPro positive; outpaced DIY
Monthly cadenceU.S. comps: Feb -3.3%, Mar +1.3%, Apr +1.8%; Easter shift boosted March; April ~+2.5% adj.

Department/Category Color

  • Positive comps: appliances, plumbing, indoor garden, electrical, outdoor garden, building materials; strength in gypsum, decking, concrete, siding; larger financed projects (kitchen/bath) remain pressured .

Consensus vs. Actuals (Q1 FY2026)

MetricConsensusActualSurprise
Revenue ($B)$39.25*$39.86 +$0.61B (Beat)
Adjusted EPS$3.589*$3.56 -$0.03 (Miss)
EBITDA ($B)$6.15*$6.13*-$0.02B (Miss)
EPS # of Estimates33*——
Revenue # of Estimates31*——

Estimates marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Sales GrowthFY2025 (52-week)~2.8% ~2.8% Maintained
Comparable Sales GrowthFY2025 (52-week)~+1.0% ~+1.0% Maintained
New StoresFY2025~13 ~13 Maintained
Gross MarginFY2025~33.4% ~33.4% Maintained
Operating MarginFY2025~13.0% ~13.0% Maintained
Adjusted Operating MarginFY2025~13.4% ~13.4% Maintained
Tax RateFY2025~24.5% ~24.5% Maintained
Net Interest ExpenseFY2025~$2.2B ~$2.2B Maintained
Diluted EPSFY2025~-3% vs. FY2024 ($14.91) ~-3% Maintained
Adjusted Diluted EPSFY2025~-2% vs. FY2024 ($15.24) ~-2% Maintained
CapexFY2025~2.5% of sales ~2.5% of sales Maintained
DividendCurrent$2.30 declared 2/25 $2.30 declared 5/22 (153rd consecutive) Maintained

Earnings Call Themes & Trends

TopicQ3 FY2025 (Nov)Q4 FY2025 (Feb)Q1 FY2026 (May)Trend
Pro ecosystem (SRS, trade credit, delivery, sales force)SRS $2.9B; cross-sell ramp; Pro capabilities in 17 markets $6.4B FY contrib (7 months); +$1B incremental annualized Pro sales in 17 markets; 80-store plan; trade credit starting SRS $2.6B Q1; exceeding expectations; trade credit onboarding in “thousands” of accounts; comp entry mid-Q2 Strengthening
Supply chain & delivery speedExpanded DFC assortment; fastest-ever delivery; awareness marketing Fastest delivery across most products; capex $3.5B FY Fastest speeds driving spend; online comp +~8% Positive momentum
AI/technologyEnhanced site search, AI review summaries Continued AI use in chat, product descriptions “Magic Apron” gen-AI tool boosting conversion; associate AI knowledge tools Expanding
Macro & housing turnoverWeather, hurricanes helped; large projects pressured Normalization signs; large projects still pressured; market flat to slightly up Consumer healthy; large projects deferred; FX headwind; May start positive Gradual improvement ex large projects
Tariffs & sourcing diversificationMonitoring; majority goods sourced in North America Diversifying sourcing; manage tariffs No single country ex-US >10% in 12 months; maintain pricing; use portfolio levers Risk managed
ShrinkProgress, tech investments 6 quarters of improvement; offsets mix Benefits continue Improving
Hurricanes/Weather impact~$200M Q3; boosted comps ~$220M Q4; January weather tough Feb weather unfavorable; March/April improved; Easter shift helped Weather variability persists

Management Commentary

  • CEO Ted Decker on demand mix and macro: “Our first quarter results were in line with our expectations… customers engaged across smaller projects… We remain bullish on the fundamentals of home improvement… housing stock is aging… 55% of homes are 40 years or older” .
  • CFO Richard McPhail on margins and FX: “Gross margin was 33.8%… decrease of ~35 bps… reflecting mix from the SRS acquisition, partially offset by lower shrink and supply chain productivity… operating margin 12.9%… adjusted 13.2%... FX rates negatively impacted total company comps by ~70 bps” .
  • Merchandising EVP Billy Bastek on tariffs and pricing: “We intend to generally maintain pricing across our portfolio… we don’t see broad-based price increases… tremendous flexibility via diversified sourcing” .
  • CEO on sourcing diversification: “12 months from now, no single country outside of the United States will represent more than 10% of our purchases” .
  • CFO on guidance bridge: “Adjusted OM decline of 40 bps in 2025: ~20 bps natural deleverage, ~15 bps SRS annualization, ~5 bps 53rd week compare” .

Q&A Highlights

  • Demand and cadence: Weather impacted February; momentum improved in March/April; May started well; Easter timing boosted March; April U.S. comps ~+2.5% adjusted .
  • Expenses/SG&A: 12% YoY SG&A increase included lapping a prior-year legal settlement and SRS expense base; underlying leverage in line with comp environment .
  • FX impact: ~$275M top-line headwind; without FX, results would have exceeded internal expectations; guidance reaffirmed .
  • SRS contribution/comps treatment: $2.6B Q1 sales; will enter comp base mid-Q2; reported in total company comp (not U.S. comp) .
  • Tariffs: Portfolio approach, maintain price positioning, diversify sourcing; no broad-based price increases anticipated; elasticity models continuously tested .
  • Inventory: YoY increase primarily reflects SRS added to base; DC load-ins aligned to speed initiatives; in-stocks “as good as they’ve ever been” .

Estimates Context

  • Revenue beat, EPS/EBITDA slight misses vs S&P Global consensus: Revenue $39.86B vs. $39.25B; adjusted EPS $3.56 vs. $3.589; EBITDA ~$6.13B vs. $6.15B; 33 EPS estimates and 31 revenue estimates *.
  • Implications: Street likely raises revenue and Pro-related line items modestly on stronger transactions/online and SRS performance, but trims EPS on mix/FX and OM trajectory given reaffirmed margin guidance and expense cadence .

Estimates marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Top-line resilience continues; expect narrative to focus on share gains (Pro, digital, fulfillment speed) and FX normalization; reaffirmed FY guide provides anchor for estimates .
  • Mix headwinds from SRS will remain a gross/operating margin drag near-term but are strategically accretive to growth; productivity and shrink improvements are offsetting factors .
  • Pro ecosystem is the central medium-term growth lever (trade credit, order management, sales force, cross-sell with SRS); watch comp inflection post SRS entry mid-Q2 .
  • Larger remodels remain subdued; turning points include stabilization in rates/sentiment and increased HELOC activity—monitor management’s December investor day for updates .
  • Tariff risk is mitigated by diversified sourcing and pricing discipline; HD positioning suggests potential share capture if smaller peers raise prices .
  • Near-term trading: Positive on revenue momentum and reaffirmed guide; EPS sensitivity remains to mix/FX; catalysts include Q2 seasonal sell-through, Pro credit adoption pace, and tariff headlines .
SOURCES
- Q1 FY2026 8-K and Press Release: **[354950_0000354950-25-000133_hd-20250520.htm:1]** **[354950_0000354950-25-000133_hd_exhibit991x05042025.htm:0]** **[354950_0000354950-25-000133_hd_exhibit991x05042025.htm:3]** **[354950_0000354950-25-000133_hd_exhibit991x05042025.htm:5]**
- Q1 FY2026 Earnings Call: **[354950_HD_3429476_1]** **[354950_HD_3429476_3]** **[354950_HD_3429476_5]** **[354950_HD_3429476_6]** **[354950_HD_3429476_7]** **[354950_HD_3429476_8]** **[354950_HD_3429476_9]** **[354950_HD_3429476_10]** **[354950_HD_3429476_11]** **[354950_HD_3429476_12]** **[354950_HD_3429476_14]** **[354950_HD_3429476_15]** **[354950_HD_3429476_16]** **[354950_HD_3429476_17]** **[354950_HD_3429476_18]** **[354950_HD_3429476_19]** **[354950_HD_3429476_20]** **[354950_HD_3429476_21]** **[354950_HD_3429476_22]** **[354950_HD_3429476_23]** **[354950_HD_3429476_24]** **[354950_HD_3429476_25]**
- Additional Press Releases: Q1 results PR **[354950_20250520CL91213:0]**; Dividend declaration **[354950_20250522CL94706:0]**
- Prior quarters for trend: Q4 FY2025 call **[354950_HD_3417745_1]** **[354950_HD_3417745_4]** **[354950_HD_3417745_6]** **[354950_HD_3417745_7]** **[354950_HD_3417745_8]** **[354950_HD_3417745_11]** **[354950_HD_3417745_14]** **[354950_HD_3417745_19]** **[354950_HD_3417745_21]** **[354950_HD_3417745_22]**; Q3 FY2025 call **[354950_HD_3407827_1]** **[354950_HD_3407827_4]** **[354950_HD_3407827_6]** **[354950_HD_3407827_7]** **[354950_HD_3407827_11]** **[354950_HD_3407827_12]** **[354950_HD_3407827_13]** **[354950_HD_3407827_14]** **[354950_HD_3407827_15]** **[354950_HD_3407827_16]** **[354950_HD_3407827_17]** **[354950_HD_3407827_19]** **[354950_HD_3407827_20]** **[354950_HD_3407827_22]** **[354950_HD_3407827_23]**

Estimates marked with * retrieved from S&P Global.