Home Depot on Tuesday stuck by its full-year sales forecast as a top executive told CNBC the retailer doesn’t plan to hike prices because of tariffs.
“Because of our scale, the great partnerships we have with our suppliers and productivity that we continue to drive in our business, we intend to generally maintain our current pricing levels across our portfolio,” Chief Financial Officer Richard McPhail told CNBC in an interview.
More than half of what the company sells comes from the U.S., he said. McPhail added that Home Depot and its suppliers have worked to diversify the source of the company’s imports over the past several years, including by decreasing the share of purchases that come from China. By this time next year, no single country outside of the U.S. will represent more than 10% of the company’s purchases, he said.
Home Depot’s pricing strategy is at odds with Walmart, which said last week that it would have to raise prices as soon as late May to cover higher costs from tariffs. The decision to keep prices the same — at least for now — also comes as a sluggish housing market causes the retailer’s sales to stagnate.
On an earnings call, McPhail said Home Depot has the scale and flexibility to manage higher tariffs, but added that keeping prices stable could also help its business.
“It’s a great opportunity for us to take share, and it’s a great opportunity for our suppliers to take share as well,” he said.
McPhail made his comments as Home Depot posted results for the fiscal first quarter, after weeks in which a range of corporations have either revised or withdrawn their financial guidance due to President Donald Trump’s rapidly changing tariffs. The home improvement retailer missed Wall Street’s first-quarter earnings expectations for the first time since May 2020, but beat sales estimates.
The retailer is still waiting for dynamics that could drive stronger spending and bigger purchases.
On an earnings call, CEO Ted Decker said “stubbornly high” interest and mortgage rates and consumers’ uncertainty about the economy have dampened home improvement spending.
“People are painting again and working in their yards and doing smaller projects, but just have not engaged in the larger projects,” he said.
For the full year, Home Depot said it expects total sales to grow by 2.8% and comparable sales, which take out the impact of one-time factors like store openings and calendar differences, to rise about 1%. Its forecast is based on the continuation of a U.S. agreement to temporarily lower tariffs to 30% on imports from China and to 10% for many other countries.
In the three-month period that ended May 4, Home Depot’s net income was $3.43 billion, or $3.45 per share, compared with $3.60 billion, or $3.63 per share, in the year-ago period. Adjusted earnings per share exclude some costs, including the impact of depreciation from acquired intangible assets.
Spring is Home Depot’s peak sales season — the Christmas of the home improvement world — as homeowners and contractors typically tackle more projects because of warmer and dryer weather. Yet even with that seasonal boost, the backdrop for Home Depot remains tough as more U.S. consumers put off home purchases or major renovation projects because of higher mortgage rates and costs of borrowing.
Sales growth has been muted. In the fiscal first quarter, comparable sales dropped 0.3% across the company. In the U.S., comparable sales increased 0.2% year over year.
That trend has been persistent, with the exception of the previous quarter. Home Depot snapped eight consecutive quarters of falling comparable sales in the fourth quarter. In that quarter, comparable sales increased 0.8% across the company.
Sales patterns improved as the quarter went on, McPhail said. Comparable sales declined 3.3% year over year in February, increased 1.3% from the prior-year period in March and rose 1.8% year over year in April, he said.
He attributed negative sales results in February to poor weather.
“We clawed our way back through the remainder of the quarter and had a great April, and we’ve seen the level of customer engagement that we saw in April continue into the first few weeks of May,” he said.
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