Shares in Home Depot (NYSE: HD) fell 1% on Wednesday. The stock price has fallen 6% over the past three months. Housing improvement retailers continued to face an uncertain macroeconomic environment in the first quarter of 2025, resulting in mixed results. Nevertheless, we are confident that the company can navigate this current landscape.
Q1 Performance
In the first quarter of 2025, Home Depot’s revenue increased 9.4% to $39.9 billion compared to the same period last year. Equivalent sales fell 0.3%. Adjusted revenues fell 3% year-on-year to $3.56 per share.
Navigating the challenge
In the first quarter, Home Depot saw consumers engage in smaller home remodeling activities and spring projects, but higher remodeling projects are under pressure at higher interest rates. Discretionary projects such as kitchen and bath remodeling that normally require funding continue to see soft involvement. The company remains optimistic about continued spring-related demand in the second quarter.
HD believes that it is well positioned to navigate the current macroeconomic environment and offers great opportunities for healthy consumers with highly fragmented markets and stable employment and wages. Appreciation of home prices along with older housing stocks that require maintenance and renewal gives us even more confidence.
Home Depot continues to perform well from SRS, which generated $2.6 billion in sales in the first quarter. SRS continues to gain shares, bringing better growth than its major vertical expectations. It also brings profits to the pro segment. Home Depot expects SRS to deliver mid-single digit sales growth in fiscal year 2025.
Home Depot believes it has great flexibility from a sourcing strategy perspective. Currently, over 50% of purchases are sourced in the US. The company is committed to diversifying its global supply chain, and expects a single country outside the US to not represent more than 10% of its purchases a year from now. Against this background and the current tariff situation, Home Depot doesn’t plan to raise prices, but it sees an opportunity to gain share in this environment.
Outlook
Home Depot expects total sales to increase approximately. 2.8% in 2025. Equivalent sales are expected to increase approximately. 1% of equivalent 52 weeks. Adjusted EPS is projected to decrease approximately. 2% of the previous year.
