Home Depot Beats Estimates, Posts Four-Year High in Comparable Sales

Home Depot reported fiscal second-quarter results for the July quarter that ended Aug. 2. Revenue rose 5.7% year over year to $47.86 billion, beating the $47.27 billion forecast by LSEG. Adjusted earnings per share increased 5.1% to $4.92, ahead of the $4.73 consensus. Same-store sales grew 1.7%, well above FactSet’s 0.9% estimate and nearly triple the 0.6% growth in the prior quarter.

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Home Depot’s business is tied to renovations and new-home construction, both sensitive to borrowing costs. Rising 30-year Treasury yields have kept mortgage rates elevated, “freezing” housing activity. CFO Richard McPhail described the environment as “frozen housing conditions,” noting that lower-rate, lock-in financing is keeping many homeowners from moving.

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• Average ticket price: up 2.8% YoY, offsetting a 1% decline in transaction count.

Home Depot Posts 4-Year High in Comps: Here's the Catch

• U.S. same-store sales: 1.3% growth (est. 0.8%). Monthly acceleration: 1.2% (May) -> 1.5% (June) -> 2.3% (July).

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• Big-ticket comps (>$1,000): +2.4%.

Home Depot Posts 4-Year High in Comps: Here's the Catch

• Digital sales growth: +11% YoY, fifth straight quarter of double-digit growth.

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• Delivery lead times: down ~45% over 18 months.

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• Tariff refund: about $685 million (?90% of the claim) returned after a February Supreme Court ruling.

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• Gross margin: 33.7% (up ~27 bps); operating margin slipped to 14.3% as SG&A rose 8.5% versus 5.7% sales growth.

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• Operating cash flow: $11.4 billion (up 27% YoY); dividends paid $4.6 billion.

Home Depot Posts 4-Year High in Comps: Here's the Catch

• Inventory: $26.8 billion, an 8.1% increase exceeding sales growth.

Home Depot Posts 4-Year High in Comps: Here's the Catch

Chairman and CEO Ted Decker is expected to return from medical leave “in a few months,” with McPhail and U.S. stores head Ann-Marie Campbell handling day-to-day operations. Lead director Greg Brenneman will oversee the board during Decker’s absence.

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Merchandising chief Billy Bastek said larger discretionary projects remain under pressure but “Pro posted positive comps and outperformed DIY.” He added that the company’s “interconnected experience” and faster delivery are driving higher customer engagement.

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Management reaffirmed its fiscal-2026 outlook: total sales growth of 2.5%–4.5% (midpoint $170.45 billion), comparable-sales growth of flat to 2%, gross margin target 33.1%, adjusted operating margin 12.8%–13%, and adjusted EPS growth of flat to 4% (midpoint $14.98).

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• Margin impact of the tariff refund: CFO McPhail called the refund a modest offset, while TradingView attributed the full 85-basis-point margin benefit to it, noting a 60-basis-point decline from a sales-mix shift.

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• Traffic versus ticket size: CNBC highlighted higher average tickets as the driver of comp gain; TradingView pointed out a 1% decline in comparable customer transactions, suggesting growth is coming from fewer shoppers spending more per visit.

Home Depot Posts 4-Year High in Comps: Here's the Catch

• “Larger discretionary projects remain under pressure during the second quarter. Pro posted positive comps and outperformed DIY.” — Billy Bastek

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Analysts note that a sustained decline in Treasury yields could lower borrowing costs and revive renovation demand. However, reliance on higher-ticket sales amid declining foot traffic means a broader housing-market recovery is still required for more robust growth.

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