US ▾
HD
Earnings call · Jul 2026 (Q2 FY27)

HOME DEPOT Q2 FY27 earnings call HD

Aug 18, 2026 Source

Executive summary

The Home Depot Q2 FY27 — Strong Comps and Market Share Gains Driven by Pro and Digital

The Home Depot delivered strong Q2 FY27 results, exceeding expectations with broad-based demand and significant market share gains, particularly in its Pro and digital channels. Despite ongoing consumer uncertainty and housing market pressures, the company reaffirmed its full-year guidance, leveraging strategic investments in store experience, interconnected fulfillment, and Pro capabilities. Management highlighted the effective use of tariff refunds to offset rising costs, maintaining value in a dynamic environment.

Highlights

5

  • Total sales increased 5.7% to $47.9 billion, exceeding expectations.

  • Comparable sales increased 1.7% (U.S. comps up 1.3%), reflecting broad-based demand.

  • Adjusted diluted earnings per share rose 5.1% to $4.92.

  • 13 of 16 merchandising departments posted positive comparable sales, indicating broad engagement.

  • Online comparable sales increased 11% year-over-year, marking the fifth consecutive quarter of double-digit growth.

Concerns

4

  • Consumer uncertainty and housing affordability continue to pressure demand for larger home improvement projects.

  • Gross margin was impacted by approximately 60 basis points from incremental cost pressures (fuel, energy, product inputs) and a 60 basis point mix change from the GMS acquisition, largely offset by tariff refunds.

  • Merchandise inventories increased by $2 billion year-over-year to $26.8 billion, with inventory turns decreasing to 4.5x from 4.6x.

  • Return on invested capital decreased to 24.8% from 27.2% in the prior year.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Comp Sales Growth
flat to 2% growth
high materiality
High
Full-year 2026 Total Sales Growth
between approximately 2.5% and 4.5%
high materiality
High
Full-year 2026 SRS Organic Sales Growth
mid-single-digit percent
medium materiality
High
Full-year 2026 New Stores Opened
approximately 15
low materiality
High
Full-year 2026 New SRS Branches Opened
40 to 50
low materiality
High
Full-year 2026 Gross Margin
approximately 33.1%
high materiality
High
Full-year 2026 Operating Margin
approximately 12.4% to 12.6%
high materiality
High
Full-year 2026 Adjusted Operating Margin
approximately 12.8% to 13%
high materiality
High
Full-year 2026 Effective Tax Rate
approximately 24.3%
low materiality
High
Full-year 2026 Net Interest Expense
approximately $2.3 billion
low materiality
High
Full-year 2026 Diluted EPS Growth
approximately flat to 4%
high materiality
High
Full-year 2026 Adjusted Diluted EPS Growth
approximately flat to 4%
high materiality
High
Full-year 2026 Capital Expenditures as % of Sales
approximately 2.5%
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
U.S.
U.S. comparable sales increased 1.3% for the quarter, with positive comps in May (0.5%), June (1.2%), and July (2.2%). The Northern and Western divisions posted positive comps.
—1.3%——
Canada
Canada posted positive comparable sales, outperforming the company average, with positive comps in both transactions and units.
Comp Transactions: PositiveComp Units: Positive
—Positive comps——
Mexico
Mexico posted positive comparable sales and continues its strong performance.
—Positive comps——
SRS
SRS comped above the company average in Q2, with positive comps across all verticals, indicating significant market share gains. Expected to deliver mid-single-digit organic sales growth for the full year.
Comps: Positive in all verticals
—Above company average——
Pro
The Pro segment posted positive comparable sales and outperformed DIY, showing strong performance across all cohorts due to investments in systems, capabilities, product assortment, delivery, sales teams, and specialized services.
—Positive comps——

HD operating KPIs by quarter

HD operating KPIs stated on its earnings calls, by fiscal quarter
KPI Aug 2025 Q2 FY26 Nov 2025 Q3 FY26 May 2026 Q1 FY27This call Jul 2026 Q2 FY27Change vs prior quarter
Stores
2,353 During the second quarter, we opened 3 new stores, bringing our total store count to 2,353. Source transcript
2,356 During the third quarter, we opened 3 new stores, bringing our total store count to 2,356. Source transcript
2,361 During the first quarter, we opened 12 new stores, bringing our total store count to 2,361. Source transcript
2,364 During the second quarter, we opened 3 new stores, bringing our total store count to 2,364. Source transcript
+0.1%
New stores opened
3 During the second quarter, we opened 3 new stores, bringing our total store count to 2,353. Source transcript
3 During the third quarter, we opened 3 new stores, bringing our total store count to 2,356. Source transcript
2 We opened 2 new stores during the quarter, not 12, apologies for that. Source transcript
3 During the second quarter, we opened 3 new stores, bringing our total store count to 2,364. Source transcript
+50%

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
Express Deliverylaunch
Appliances Next-Day Deliveryexpansion
USG Ultralight Tough Gypsum Panelslaunch
Ruko Joint Treatmentsexpansion

Deals & partnerships

GMS Acquisition of GMS in September 2025.

The acquisition of GMS in September 2025 is a factor in the total sales growth guidance for fiscal 2026 and contributed to a mix impact on gross margin in Q2 FY27.

Mingledorff's Acquisition of Mingledorff's.

The acquisition of Mingledorff's is a factor in the total sales growth guidance for fiscal 2026 and contributed to a mix impact on gross margin in Q2 FY27.

USG Exclusive launch partnership for new gypsum panels.

The Home Depot will be the exclusive launch partner for USG's newest innovation, ultralight tough gypsum panels, in the big box retail channel.

Ruko Expansion of product lineup across stores.

Expanding the product lineup of Ruko joint treatments across Home Depot stores, building on decades of strong Pro loyalty.

Risks & headwinds

Consumer uncertainty and housing affordability Ongoing

Pressure demand for larger home improvement projects.

Mitigation:Focus on controlling what can be controlled: core culture, frictionless interconnected experience, and winning the Pro.

Incremental cost pressures Throughout FY26

Approximately 60 basis points impact on gross margin from fuel, energy, and other product input costs (commodities like resin and metals), and changes in tariffs (Section 101 expiration, Section 301 replacement).

Mitigation:Tariff refunds are being used to offset these unplanned and rising cost pressures, with full offset expected over the year. Merchants are working with supply chain teams to manage costs.

Largely discretionary projects Ongoing

Remain under pressure.

Mitigation:Focus on smaller repair and maintenance projects, and core categories that are resonating with customers.

Housing turnover at historical lows Ongoing

Housing turnover has been at these low levels for 4 years, with no sign of an inflection point.

Mitigation:While a step-down in rates could bring life to housing, the company focuses on internal strategies given the lack of an external inflection point.

What to watch in Q3 FY27

Gross Margin Trajectory

Q3 FY27, Q4 FY27
Current 33.7% in Q2, benefited from tariff refunds
Target Flat YoY in Q4 FY27

Why it matters

To assess if the company can maintain gross margin stability after the tariff refund benefit rolls off and against ongoing cost pressures.

I think what we would expect to see is that our gross margin rate in the fourth quarter will likely be right around flat compared to last year. So this is sort of a Q2 and Q3 dynamic, which obviously just has a little complication of the timing of the receipt of the refunds.

Q&A highlights

Can you elaborate on the broadening of category strength, particularly the 13 areas with positive comps, and the outlook for the back half?

The strongest performance was seen in core businesses like electrical, plumbing, hardware, and tools, both in-store and online. Only 3 of the top 20 performing businesses were seasonal, indicating broad-based strength in the middle of the store.

“we saw 13 categories of our 16 positive comp. And we had -- if you think about the core of our business, electrical, plumbing, hardware tools, both in-store and online. We had great performance online. I mentioned the double-digit positive comps. Those businesses were even greater than the online comp, but really the middle of the store and to put that in context, if you look at our top 20 businesses across the store that drove a positive performance, only 3 of those 20 were actually in the seasonal business.”

asked by Chuck Grom · answered by William Bastek

2 min read 5 chapters

Detailed narrative

Strategic Investments Driving Performance

The Home Depot's Q2 performance was bolstered by strategic investments in its core culture, interconnected experience, and Pro segment. Initiatives like the Magic Apron application, which aids associates and customers in store navigation and product information, have received positive feedback and enhanced customer satisfaction. These technology-enabled tools make it easier for associates to serve customers, leading to greater engagement and stronger sales.

Enhanced Fulfillment and Digital Engagement

The company continues to prioritize speed of delivery, with over 65% of in-stock parcel deliveries now same-day or next-day. A nationwide launch of Express Delivery offers tens of thousands of products in 3 hours or less, with most deliveries occurring in under an hour. Digital platforms saw an 11% increase in sales, marking the fifth consecutive quarter of double-digit growth, driven by increased traffic and conversion, particularly through the mobile app.

Pro Business Outperformance

The Pro segment posted positive comps and outperformed DIY, attributed to investments in systems, capabilities, product assortment, delivery, sales teams, and specialized services. The integration of SRS and GMS acquisitions allows for expanded product catalogs and enhanced service capabilities, with 90% of stores closing a sale through SRS in the last 12 months. This ecosystem approach is resonating with Pro customers, driving loyalty and market share.

Merchandising Strength and Innovation

13 out of 16 merchandising departments posted positive comps, indicating broad-based engagement beyond seasonal categories. Strong performance was noted in portable power tools (record-setting sales), storage solutions (Milwaukee Packout), and appliances (next-day delivery coverage to 60% of the population for key SKUs). New exclusive partnerships with USG for ultralight tough gypsum panels and Ruko joint treatments further solidify Pro offerings and competitive advantage.

Tariff Refunds and Cost Management

The company received $730 million in tariff refunds, with $685 million reducing Q2 cost of goods sold, providing a 145 basis point gross impact to margin. These refunds were primarily used to offset unplanned and rising cost pressures from fuel, energy, and other product inputs, as well as changes in tariffs (Section 101 expiration and Section 301 replacement). Management reaffirmed full-year guidance, expecting the tariff benefits to largely offset these incremental costs over the year, leading to a clean jumping-off point for FY27.

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