Home Depot Reports Mixed Results for Q1 FY’25

Home Depot (NYSE: HD) has released its financial performance for the first quarter of fiscal 2025, reflecting a mixed bag of results when compared to market expectations. The company also reaffirmed its guidance for the remainder of the fiscal year.

Home Depot Reports Mixed Results for Q1 FY’25

Home Depot’s financial results for the first quarter of fiscal 2025 showed a revenue figure of $39.9 billion, which was a 9.4% increase from the same period in fiscal 2024. This figure exceeded the expected revenue of $39.38 billion.

However, despite this positive revenue growth, the company faced challenges in meeting earnings expectations. Net earnings for the quarter were reported at $3.4 billion, or $3.45 per diluted share, which fell short of the anticipated earnings per share (EPS) of $3.59. This represented a decline from the previous year’s first quarter EPS of $3.63.

Comparing the company’s performance to expectations, it becomes apparent that while Home Depot succeeded in driving sales, it struggled to translate this into higher profitability. The adjusted diluted EPS for the quarter was $3.56, down from $3.67 in the same quarter of fiscal 2024. This decline can be attributed to several factors, including an increase in operating expenses and the impact of foreign exchange rates, which negatively affected comparable sales by approximately 70 basis points.

Ted Decker, Home Depot’s chair, president, and CEO, acknowledged the challenges but remained optimistic about the company’s performance. He highlighted continued customer engagement in smaller projects and spring events, which contributed to the revenue growth.

Decker also emphasized the company’s readiness for the ongoing spring season, expressing confidence in the store’s preparedness and product assortment.

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Home Depot Reaffirms Guidance for Fiscal 2025

Looking ahead, Home Depot has reaffirmed its guidance for fiscal 2025, maintaining a cautiously optimistic outlook. The company expects total sales growth of approximately 2.8% and comparable sales growth of around 1.0% for the 52-week period. This guidance considers the company’s plans to open approximately 13 new stores and maintain a gross margin of about 33.4%.

Home Depot’s operating margin is projected to be approximately 13.0%, with an adjusted operating margin of around 13.4%. The company also anticipates a tax rate of approximately 24.5% and net interest expenses totaling around $2.2 billion. Despite the challenges faced in the first quarter, Home Depot remains committed to its strategic initiatives and is confident in its ability to achieve its fiscal 2025 targets.

In terms of earnings guidance, Home Depot expects a slight decline in diluted earnings per share, projecting a decrease of approximately 3% from the $14.91 reported in fiscal 2024. The adjusted diluted earnings per share is also expected to decline by about 2% from $15.24 in fiscal 2024.

Despite these projected declines, the company remains focused on capital expenditures, which are expected to account for approximately 2.5% of total sales. Overall, Home Depot’s reaffirmed guidance reflects its confidence in navigating the challenges of the current fiscal year while continuing to invest in growth opportunities.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.