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HOME DEPOT, INC. (HD)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 (fiscal quarter ended Feb 2, 2025) delivered broad-based improvement: net sales $39.70B (+14.1% YoY), comps +0.8% (U.S. +1.3%), GAAP diluted EPS $3.02 and adjusted EPS $3.13 (+9.4% YoY), helped by an extra week and hurricane demand .
  • The 14th week added approximately $2.5B of sales and ~$0.30 of EPS; hurricane-related sales contributed ~$220M to Q4 comps, while FX reduced comps ~70 bps; monthly comps were influenced by holiday timing and adverse January weather .
  • Fiscal 2025 guidance introduced: total sales +~2.8%, comps +~1.0%, gross margin ~33.4%, operating margin ~13.0% (adjusted ~13.4%), adjusted EPS down ~2% (flat on a 52-week basis), capex ~2.5% of sales; quarterly dividend increased 2.2% to $2.30 per share .
  • Strategic catalysts: faster delivery speeds across more products, Pro ecosystem momentum (>$1B incremental sales in 17 markets), and SRS cross-sell/expansion; mix from SRS will pressure margins but is viewed as accretive to growth and cash .

What Went Well and What Went Wrong

What Went Well

  • Positive comps in Q4 for the first time in two years, with 15 of 19 U.S. regions positive and Canada/Mexico positive in local currency; “our fourth quarter results exceeded our expectations” (Ted Decker) .
  • Delivery speeds fastest ever with expanded DFC assortment and store-enabled delivery options; management: “customers are increasing their spend” as delivery improves .
  • Pro ecosystem gaining share: all Pro cohorts positive comp; initiatives drove over $1B incremental annualized sales across 17 markets (Ann‑Marie Campbell) .

What Went Wrong

  • Mix and amortization headwinds: Q4 gross margin ~32.8% (-25 bps YoY) and operating margin 11.3% (adjusted 11.7%), reflecting SRS mix and natural deleverage at ~1% comp .
  • Large discretionary, financed projects (e.g., kitchen/bath remodels) remain pressured by higher rates; big-ticket softness persisted outside select categories .
  • FX headwind (70 bps to comps) and weather-sensitive January (negative comps) balanced strong December; hurricane demand ($220M) is non-repeatable in 2025 .

Financial Results

Quarterly Financials (oldest → newest)

MetricQ2 FY2024 (Quarter ended Jul 28, 2024)Q3 FY2024 (Quarter ended Oct 27, 2024)Q4 FY2024 (Quarter ended Feb 2, 2025)
Net Sales ($USD Billions)$43.175 $40.217 $39.704
YoY Sales Growth (%)+0.6% +6.6% +14.1%
Diluted EPS (GAAP)$4.60 $3.67 $3.02
Adjusted Diluted EPS (Non-GAAP)$4.67 $3.78 $3.13
Operating Margin (%)15.1% 13.5% 11.3%
Adjusted Operating Margin (%)15.3% 13.8% 11.7%
Comparable Sales (%)-3.3% -1.3% +0.8%
U.S. Comparable Sales (%)-3.6% -1.2% +1.3%

Q4 Monthly Comps

MetricNovemberDecemberJanuary
Total Company Comps (%)-1.7% +6.6% -2.0%
U.S. Comps (%)-2.0% +8.0% -1.4%

Q4 One-time and External Factors

ItemImpact
14th week (53rd week fiscal year)+$2.5B sales; +$0.30 EPS (GAAP and adjusted)
Hurricane-related sales~+$220M; +~65 bps to Q4 comps
FX impact on Q4 comps~-70 bps

KPIs

KPIQ2 FY2024Q3 FY2024Q4 FY2024
Customer transactions (millions)451.0 399.0 400.4
Average ticket ($)$88.90 $88.65 $89.11
Sales per retail sq. ft. ($)$660.17 $582.97 $556.90

Department/Segment Color (qualitative)

AreaQ4 FY2024 Status
Departments with positive compsAppliances, Indoor Garden, Lumber, Power, Building Materials, Paint, Outdoor Garden, Storage, Hardware, Plumbing – 10 of 16
Big-ticket comp transactions+0.9% YoY; strength in appliances, building materials, lumber
Pro vs DIYBoth positive; Pro outpaced DIY

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total sales growthFY2025 (52-week vs FY2024 53-week)N/A (initial issuance)~+2.8% —
Comparable sales growthFY2025 (comparable 52-week)N/A~+1.0% —
New store openingsFY2025N/A~13 new stores —
Gross marginFY2025N/A~33.4% —
Operating margin (GAAP)FY2025N/A~13.0% —
Adjusted operating marginFY2025N/A~13.4% (excl. ~40 bps amort.) —
Effective tax rateFY2025N/A~24.5% —
Net interest expenseFY2025N/A~$2.2B —
Diluted EPS (GAAP)FY2025N/A~-3% vs $14.91 in FY2024 —
Adjusted diluted EPSFY2025N/A~-2% vs $15.24 in FY2024 (flat on 52-week basis per mgmt) —
Capital expendituresFY2025N/A~2.5% of sales —
DividendQ1 FY2025$2.30/share quarterlyIncreased 2.2% to $2.30 per share Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2024 and Q3 FY2024)Current Period (Q4 FY2024)Trend
AI/technology for customer experienceFocus on site experience; SRS integration began; macro pressured demand “Leveraging AI to enhance chat features, product descriptions, rating summaries”; fastest delivery speeds in company history Expanding AI/GenAI and delivery tech; Magic Apron launched post‑quarter
Supply chain & deliveryWeather normalization and hurricane demand supported seasonal/outdoor projects Downstream supply chain investments (DFC assortment, store-enabled delivery) driving faster speeds and higher spend Improving speeds and options; continued investment
Tariffs/macro & ratesMacro uncertainty and higher rates pressured demand Management prepared to navigate tariffs; higher rates continue to pressure financed remodels; housing turnover near 40‑year low Macro headwinds persist; consumers adapting over time
Pro ecosystemBuilding capabilities; SRS sales included in results (late Q2) All Pro cohorts positive comp; >$1B incremental annualized sales in 17 markets; SRS cross‑sell via QuoteCenter Strengthening; scaling trade credit/order mgmt planned
Product performanceSeasonal/outdoor projects improved with normalized weather Positive comps across 10/16 departments; appliances and Gift Center posted record sales Broadening engagement beyond repairs/decor
Shrink & store opsN/A“Significant progress in shrink” and exceptional safety performance Improving shrink trends supporting margins

Management Commentary

  • Ted Decker (CEO): “Our fourth quarter results exceeded our expectations as we saw greater engagement in home improvement spend, despite ongoing pressure on large remodeling projects.”
  • Richard McPhail (CFO): “Gross margin was approximately 32.8%, a decrease of 25 bps…reflecting a change in mix as a result of the SRS acquisition…Operating margin…11.3%…Adjusted operating margin…11.7%.”
  • Ann‑Marie Campbell (SEVP): “These investments have driven over $1 billion in incremental sales on an annualized basis in 17 markets.”
  • William Bastek (EVP Merchandising): “Today, we have the fastest delivery speeds across the greatest number of products in company history…appliance and Gift Center events posting record sales years.”

Q&A Highlights

  • Housing turnover and comps: Management does not assume meaningful improvement in turnover or rate environment; 1% comp triangulates underlying run-rate with hurricane benefits unlikely to repeat . Flow-through leverage approximates 10 bps per comp point above 1% .
  • Monthly comps/weather: Holiday shifts boosted December and hurt November/January; weather was “particularly tough” in January; exit run-rate not overly read from January .
  • Market share and SRS: HD expects a flat-to-slightly up market; share gains driven by interconnected retail and Pro ecosystem; SRS expected mid‑single digit organic growth in FY2025 . SRS mix effect ~40 bps full-year; cash accretive within first year .
  • Pricing and tariffs: Pricing environment rational and promotional activity reverted to pre‑COVID norms; management prepared to navigate tariff changes via diversified sourcing and vendor scale .
  • Margin bridge FY2025 vs FY2024: 40 bps adjusted operating margin decrease comprises ~20 bps natural deleverage at ~1% comp, ~15 bps from 12 months vs 7 months of SRS, ~5 bps from 53rd week comparison . Capex run-rate guided to ~2.5% of sales, reflecting new store program (80 stores over 5 years) and high-return investments .

Estimates Context

  • We attempted to retrieve S&P Global (Capital IQ) consensus for Q4 2025; data was unavailable due to request limits. As a result, we cannot provide definitive beat/miss vs Wall Street consensus for EPS or revenue at this time [GetEstimates error: “Daily Request Limit…Exceeded”]. Values retrieved from S&P Global.*

  • Note: Q4 included a 14th week (+$2.5B sales and +$0.30 EPS), and hurricane demand (~$220M) that would typically be adjusted in sell-side models for comparability .

Key Takeaways for Investors

  • Near-term: Q4 comps turned positive with broad-based category strength, aided by one-time factors; watch for normalization as hurricane and 14th week benefits roll off in FY2025 .
  • Margin mix: SRS and natural deleverage will pressure margins (~40 bps YoY adjusted OM), but offsetting productivity (supply chain, shrink) should help hold gross margin ~33.4% in FY2025 .
  • Pro momentum: Pro cohorts are positive, with >$1B incremental sales in 17 markets and planned expansion of trade credit/order management—sustained share gains likely even in flat markets .
  • Interconnected advantage: Delivery speeds and options are a differentiator; continued investments should drive higher conversion and cross‑channel engagement, supporting comps .
  • Capital allocation: Dividend increased to $2.30 per share; capex elevated (~2.5% of sales) to fund new stores and high-ROI initiatives; ROIC remains robust at ~31% TTM .
  • Macro watchpoints: Rates/housing turnover assumptions are conservative; any improvement would provide upside to comps and leverage, while tariffs/FX remain manageable but monitored .
  • FY2025 setup: Guidance implies adjusted EPS down ~2% reported but essentially flat on a 52‑week basis; expect comps to improve slightly through the year with continued SRS integration and store openings .