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    Earnings call· Feb 2026(Q4 FY26)

    HOME DEPOT Q4 FY26 earnings call HD

    Feb 24, 2026 Source

    Executive summary

    The Home Depot, Inc. Q4 FY26 — Pro Ecosystem Traction and Market Share Gains

    The Home Depot delivered Q4 FY26 results largely in line with expectations, driven by strong Pro segment performance and continued digital engagement. The company is focused on enhancing its Pro ecosystem and interconnected experience, while navigating ongoing consumer uncertainty and housing market pressures. Management affirmed its FY26 guidance, anticipating market share gains despite a challenging macro environment.

    Highlights

    5

    • Sales for fiscal 2025 were $164.7 billion, an increase of 3.2% from the prior year.

    • Comp sales for fiscal 2025 increased 0.3%, with U.S. comps up 0.5%.

    • Online comp sales increased approximately 11% compared to Q4 FY25.

    • Pro segment posted positive comps and outperformed DIY in Q4 FY26.

    • SRS grew organic sales by a low single-digit percentage in FY25 and expanded market share.

    Concerns

    5

    • Adjusted diluted EPS for fiscal 2025 decreased 3.6% to $14.69 compared to $15.24 in the prior period.

    • Q4 FY26 total sales decreased $1.5 billion or 3.8% YoY to $38.2 billion.

    • Operating margin for Q4 FY26 was 10.1%, down from 11.3% in Q4 FY25.

    • Inventory turns decreased to 4.4x from 4.7x last year.

    • Larger discretionary projects remain under pressure, and consumer uncertainty is the #1 reason for not investing in large projects.

    Guidance & targets

    18
    CategoryTargetConfidence
    Total sales growth
    approximately 2.5% to 4.5%
    high materiality
    High
    Comparable sales growth
    approximately flat to 2%
    high materiality
    High
    Adjusted diluted earnings per share growth
    approximately flat to 4%
    high materiality
    High
    SRS organic sales growth
    mid-single-digit percent
    medium materiality
    High
    New store openings
    approximately 15 new stores
    low materiality
    High
    New SRS locations
    40 to 50 new SRS locations
    low materiality
    High
    Gross margin
    approximately 33.1%
    high materiality
    High
    Operating margin
    approximately 12.4% to 12.6%
    high materiality
    High
    Adjusted operating margin
    approximately 12.8% to 13%
    high materiality
    High
    Effective tax rate
    approximately 24.3%
    low materiality
    High
    Net interest expense
    approximately $2.3 billion
    low materiality
    High
    Diluted EPS and Adjusted diluted EPS growth
    approximately flat to 4%
    high materiality
    High
    Capital expenditures
    approximately 2.5% of sales
    medium materiality
    High
    Timing of excess cash position for share repurchases
    sometime in the first half of 2027
    high materiality
    Medium
    First half gross margin
    down about 50 basis points versus last year
    medium materiality
    High
    Second half gross margin
    right around flat to last year
    medium materiality
    High
    Year-over-year EPS performance
    mid-single-digit percentage negative
    high materiality
    High
    Comp sales for H2 FY26
    slightly higher than our comps in the first half
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Northern and Western Division
    Regional performance varied in Q4 FY26.
    		—positive comps——
    Mexico
    Reported in local currency for Q4 FY26.
    		—positive comps——
    Canada
    Reported in local currency for Q4 FY26.
    		—negative comps——
    SRS
    Grew organic sales in fiscal 2025 and expanded market share despite pressured industry demand and lack of storms.
    		—low single-digit percentage——
    Pro
    Outperformed DIY in Q4 FY26, with strength in categories like gypsum, wire, concrete, and plumbing.
    		—positive comps——

    Operational metrics

    42
    Adjusted diluted earnings per share
    $14.69down 3.6% YoY
    FY25

    Compared to $15.24 in the prior period.

    Adjusted diluted earnings per share
    $2.72down 13.1% YoY
    Q4 FY26

    Compared to $3.13 in the prior year.

    Total sales
    $164.7 billionup 3.2% YoY
    FY25

    An increase of $5.2 billion versus fiscal 2024.

    Total sales
    $38.2 billiondown $1.5 billion or 3.8% YoY
    Q4 FY26

    Compared to last year.

    Comp sales
    0.3%increase from prior year
    FY25

    Total company comp sales.

    U.S. Comp sales
    0.5%increase from prior year
    FY25

    U.S. comp sales.

    Comp sales
    0.4%increase from prior year
    Q4 FY26

    Total company comp sales.

    U.S. Comp sales
    0.3%increase from prior year
    Q4 FY26

    U.S. comp sales for the quarter.

    Online comp sales growth
    11%YoY
    Q4 FY26

    Sales leveraging digital platforms.

    Comp average ticket growth
    2.4%
    Q4 FY26

    Primarily reflects price increases, greater mix of higher ticket items, and customers trading up.

    Comp transactions growth
    -1.6%
    Q4 FY26

    Offsetting the growth in comp average ticket.

    Big ticket comp transactions (over $1,000)
    1.3%YoY
    Q4 FY26

    Compared to the fourth quarter of last year.

    Gross margin
    32.6%down 20 bps YoY
    Q4 FY26

    Primarily reflecting a change in mix as a result of the GMS acquisition.

    Gross margin
    33.3%down 10 bps YoY
    FY25

    In line with expectations.

    Operating expense as % of sales
    22.6%up 105 bps YoY
    Q4 FY26

    Reflects natural deleverage from top line results and lapping the 53rd week.

    Operating expense as % of sales
    20.6%up 70 bps YoY
    FY25

    Compared to fiscal 2024.

    Operating margin
    10.1%down from 11.3% in Q4 FY25
    Q4 FY26

    GAAP operating margin.

    Adjusted operating margin
    10.5%down from 11.7% in Q4 FY25
    Q4 FY26

    Excluding intangible asset amortization.

    Operating margin
    12.7%down from 13.5% in FY24
    FY25

    GAAP operating margin.

    Adjusted operating margin
    13.1%down from 13.8% in FY24
    FY25

    Excluding intangible asset amortization.

    Interest and other expense
    $551 milliondecreased by $57 million
    Q4 FY26

    Compared to prior year.

    Effective tax rate
    22%
    Q4 FY26

    For the fourth quarter.

    Effective tax rate
    23.9%
    FY25

    For the full year.

    Diluted earnings per share
    $2.58decrease of 14.6% YoY
    Q4 FY26

    Compared to the fourth quarter of 2024.

    Diluted earnings per share
    $14.23decrease of 4.6% YoY
    FY25

    Compared to fiscal 2024.

    EPS impact from 53rd week
    $0.30
    FY24

    Fiscal 2024 included a 53rd week, which added approximately $0.30 to diluted earnings per share and adjusted diluted earnings per share for the fourth quarter and the year.

    Total store count
    2,359opened 12 new stores in FY25
    end of FY25

    At the end of fiscal 2025.

    Merchandise inventories
    $25.8 billionup approximately $2.4 billion YoY
    end of FY25

    Reflecting higher inventory costs and the acquisition of GMS.

    Inventory turns
    4.4xdown from 4.7x last year
    FY25

    For the full year.

    Capital expenditures
    $1.1 billion
    Q4 FY26

    Invested back into the business.

    Capital expenditures
    $3.7 billion
    FY25

    Total capital expenditures for fiscal 2025.

    Dividends paid
    $9.2 billion
    FY25

    Paid to shareholders during the year.

    Quarterly dividend increase
    1.3%
    Q1 FY27

    Board of Directors increased quarterly dividend to $2.33 per share.

    Annual dividend
    $9.32
    FY27

    Equates to an annual dividend of $9.32 per share.

    Return on invested capital
    25.7%down from 31.3% in Q4 FY25
    FY25

    Computed on the average of beginning and ending long-term debt and equity for the trailing 12 months.

    Underlying demand comp
    under 1%relatively stable
    FY25

    Consistent underlying demand comp across the country, adjusting for storms.

    Roofing industry shipments decline
    28%YoY
    Q4 FY26

    According to ARMA data, total industry shipments of shingle squares were down 28% year-over-year, the lowest industry volume since 2019.

    Tax stimulus range high end
    $200 billion
    FY26

    Range of what will show up in household pocket books, with a low of $70 billion. Midpoint of $135 billion could yield 0.5 point of comp support for Home Depot.

    Home Depot share of PCE
    60 bps
    FY26

    Used to estimate potential comp support from tax stimulus.

    Tariff exposure (products)
    mid-single digits
    Q4 FY26

    Exposure of products subject to tariffs.

    SKU price impact from tariffs
    3%
    Q4 FY26

    Estimated impact on SKU prices due to tariffs.

    Cumulative underspend in home improvement
    $22 billion
    current

    Estimate by third-party consulting, representing underspent amount in aging homes.

    Industry KPIs

    9
    MetricValueDetails
    Sg a OPEX ratio22.6%% of sales
    Comparable sales0.3%%
    Store count growth2,359stores
    Gross margin drivers32.6%%
    Tariff refund claims—
    Pro vs diy performancepositive comps
    Inventory position markdown risk$25.8 billionUSD
    Same sku like for like inflation3%%
    Distribution supply chain cost economics—

    Deals & partnerships

    1
    GMSacquisition

    The GMS acquisition was completed, and they completed several tuck-in acquisitions and opened greenfield locations across their verticals. The annualization of GMS impacts gross margin and operating expenses in FY26.

    Risks & headwinds

    9
    Consumer uncertaintyFY26

    Ongoing

    Mitigation: Focus on delivering best customer experience and value proposition, investing in stores, interconnected shopping, and Pro segment.

    Housing affordabilityFY26

    Impacted by current mortgage rates and increased home prices since 2019

    Mitigation: Anticipate pressures will persist as no catalyst for inflection in housing activity is seen.

    Housing turnover at historical lowsFY26

    Remained at historical lows since 2023

    Mitigation: Significantly reduced demand for projects and purchases associated with buying and selling a home; anticipate pressures will persist.

    Lack of storm activityFY25

    No storm activity in 2025

    Mitigation: Impacted regional performance and created tough comp compares for storm-affected geographies.

    Pressured industry demand for roofingQ4 FY26, Q1 FY26

    Roofing industry shipments down 28% YoY in Q4 FY26

    Mitigation: SRS invested in price to maintain share gains, which will bleed into Q1 FY26 margin expectations.

    Larger discretionary projects under pressureFY26

    Ongoing

    Mitigation: Not yet seen an increase in big ticket discretionary projects, which would signal a market turn.

    Potential for wider spread home price decreaseFY26

    Unquantified

    Mitigation: Could have a negative psychological impact on consumers.

    Negative transactions offsetting ticket growthFY26

    Assumed in FY26 guidance

    Mitigation: Guidance assumes negative transactions will offset the ~3% ticket increase from pricing actions.

    Consumer confidence and sentimentFY26

    Unquantified

    Mitigation: Continued consumer uncertainty is the #1 driver for not investing in large projects; linked to jobs picture, overall price levels, and affordability.

    Q&A highlights

    8

    What are the key initiatives for improving the Pro value proposition in 2026, especially regarding digital planning tools and delivery?

    Management detailed investments in sales force, order management, trade credit, and AI-powered project tools like AI takeoff schemes. They highlighted improved delivery reliability, B2B online sales growth, and new features like live tracking for bulky deliveries, which customers are 'loving'.

    “We've been looking for 2 Sigma on time and complete for our delivery to our Pros, and we achieved that this past year.”

    asked by Steven Forbes · answered by Edward Decker

    2 min read7 chapters

    Detailed Narrative

    01

    Pro Ecosystem Enhancements

    The Home Depot is maturing its Pro ecosystem through continued investments in sales force, order management, trade credit, and delivery capabilities. New AI tools, such as AI takeoff schemes and project management features, are being introduced to streamline Pro workflows, allowing them to build projects by simply typing in the project type. These enhancements aim to drive greater engagement and complex sales, with B2B online sales already outpacing overall online growth.

    02

    Customer Experience and Store Operations

    Efforts to improve the customer experience include realigning store positions and transitioning tasking to MET teams, freeing up Orange Apron associates to engage more with customers. The company has also introduced an operations experience manager and a dedicated Pro customer experience manager to enhance interconnected and fulfillment experiences. These changes have led to increased associate engagement, higher Pro sales, and improved customer satisfaction scores.

    03

    Digital Platform Success and Delivery Reliability

    Online comp sales increased approximately 11% in Q4 FY26, demonstrating the continued success of interconnected platforms. A key enhancement is the rollout of real-time delivery tracking for big and bulky items, providing customers with greater visibility and certainty. This feature, enabled by new handheld devices for drivers, removes friction from the experience and leads to incremental customer engagement and sales.

    04

    SRS and GMS Integration and Synergy

    SRS grew organic sales by a low single-digit percentage in FY25 and is expected to achieve mid-single-digit organic sales growth in FY26. The GMS acquisition, along with several tuck-in acquisitions, is progressing well. The company is actively pursuing revenue synergies by combining customer approaches, making warm handoffs between sales reps, and cross-selling across Home Depot, HD Supply, SRS, and GMS, including commercial roofing opportunities.

    05

    Market Dynamics and Consumer Behavior

    Underlying demand remained relatively stable throughout FY25, with a sales benefit from January storm activity. While big ticket transactions over $1,000 were positive, larger discretionary projects remain under pressure due to ongoing consumer uncertainty🌐, housing affordability challenges, and historically low housing turnover rates. The company notes a cumulative underspend of $22 billion in home improvement, suggesting a repair-over-replace cycle for some consumers.

    06

    Tariff Impact and Mitigation

    More than 50% of The Home Depot's projects are sourced domestically and are not subject to tariffs. The company is analyzing the impacts of recent tariff decisions but has largely completed tariff-related pricing actions related to impacts back to April. The estimated SKU price impact from tariffs on affected goods is approximately 3%, and the company remains focused on advocating for value for its customers.

    07

    Q1 FY26 Financial Outlook

    The company anticipates its year-over-year EPS performance to be mid-single-digit percentage negative in Q1 FY26, primarily due to acquisition annualization and timing comparisons. Gross margin in the first half of FY26 is expected to be down about 50 basis points versus last year, with the largest impact in Q1, gradually improving to flat in the second half. Operating expense as a percentage of sales is also expected to be highest in Q1.

    AI-generated summary of the company’s earnings call. Not investment advice.