Home Depot lost some momentum in sales growth during the third quarter, but this was mainly due to external factors coming from a highly changeable market, according to an analyst.
The retailer’s net sales for the quarter ended November 2 grew 2.8 per cent to $41.4 billion, reflecting a more modest pace compared to the 4.9 per cent uplift in the second quarter.
Excluding the benefit from the GMS acquisition, sales were up only 0.9 per cent. Both overall and US comparable sales were flat for the quarter.
According to GlobalData MD Neil Saunders, such softness does not pose a huge concern for Home Depot, as it was mostly down to external factors rather than anything the company has done wrong.
“However, it also underlines that the market is extremely changeable, which makes producing solid runs of growth almost impossible. The good news is that the home improvement sector is not completely slumping even if it remains in something of a valley,” he said.
Saunders pointed out some headwinds for the home improvement sector, including the lack of storms during the summer months and consumer hesitation over how to spend their money.
The number of projects undertaken during the period declined by 0.8 per cent, most of which came from bigger-ticket projects, such as full remodels, where consumers remain nervous about the expense, the analyst said. Smaller projects, such as refreshes, fared better, but these are not categories where Home Depot is the destination of choice, he added.
The housing market, on the other hand, was solid during the third quarter, with total home sales increasing by 2.1 per cent, Saunders continued.
“In theory, this is a good thing for home improvement as new movers tend to spend more on DIY; however, they tend to do this in the six to 12 months after a move, so the uplift in activity is too new to have a material effect. Even so, it is a good sign that shows the housing market might be loosening, which could unlock more demand as we move into 2026,” he said.
On the bottom line, Home Depot’s net earnings flatlined at $3.6 billion.
The company expects total sales to increase approximately 3 per cent and comparable sales growth to be slightly positive for the full year.
“This does include acquisitions, so the underlying numbers are somewhat softer and represent a decline in volumes – especially as tariffs have impacted some prices,” Saunders said.
“All in all, Home Depot is navigating the current choppy environment very well, and its customer metrics like awareness, penetration and satisfaction all remain very strong. This will serve it well over the longer term,” he added.
