The Home Depot Inc. (NYSE:HD) shares traded lower after the company reported third-quarter fiscal 2025 results, showing a sales beat but an earnings miss, as consumers continued to pull back on discretionary home-improvement spending.
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The retailer posted third-quarter sales of $41.4 billion, up 2.8% from a year earlier and above the $41.137 billion analyst estimate. The quarter included about $900 million in revenue from the GMS Inc. acquisition. Comparable sales rose 0.2%, while U.S. comparable sales edged up 0.1%.
Net earnings were $3.6 billion, or $3.62 per diluted share, down from $3.67 a year ago. GAAP EPS slipped 1.4%. Adjusted diluted EPS was $3.74, missing the $3.85 estimate, and down from $3.78 last year.
Also Read: Home Depot Q3 Preview: Will Housing Weakness And Costly Mortgages Pressure The Retailer?
Housing Demand
Management cited weaker storm-driven seasonal demand and a cautious consumer backdrop as key pressures.
CEO Ted Decker said, "Our results missed our expectations primarily due to the lack of storms in the third quarter, which resulted in greater than expected pressure in certain categories. Additionally, while underlying demand in the business remained relatively stable sequentially, an expected increase in demand in the third quarter did not materialize."
"We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand. Our teams are continuing to execute at a high level and we believe we are growing our market share," he added.
Metrics
Customer transactions declined 1.4% to 393.5 million, while the average ticket increased 2% to $90.39. Comparable customer transactions decreased 1.6%, and comparable average ticket rose 1.8%.
Operating income was $5.35 billion, down 1.2% from a year earlier. Adjusted operating income totaled $5.51 billion, compared with $5.56 billion in the prior-year period. GAAP operating margin was 12.9%, and adjusted operating margin was 13.3%. Gross profit increased 2.9% to $13.8 billion.
The company generated $12.98 billion in operating cash flow for the first nine months of fiscal 2025, compared with $15.14 billion a year earlier. Capital expenditures were $2.62 billion.
Cash and cash equivalents totaled $1.68 billion at quarter-end. Total debt, including short-term and long-term borrowings, was about $56.0 billion.
Outlook
Home Depot lowered its fiscal 2025 GAAP EPS guidance from $14.46 to $14.02, below the $14.61 analyst estimate. The company also reduced its adjusted EPS guidance from $14.94 to $14.48, compared with the $14.99 estimate.
Home Depot raised its fiscal 2025 sales outlook from $163.980 billion to $164.299 billion, still marginally below the $164.742 billion analyst estimate.
Home Depot expects GMS to contribute approximately $2billion in incremental sales for the full year.
Guidance reflects third-quarter performance, as well as continued fourth-quarter pressure from reduced storm activity, consumer uncertainty, softness in housing, and the inclusion of GMS.
Related: Home Depot Could Hammer Out Gains With Pro Expansion, Analyst Says
At the end of the quarter, Home Depot operated 2,356 retail stores and more than 1,200 SRS locations across the U.S., Canada, and Mexico, employing more than 470,000 associates.
Home Depot shares remain under pressure in 2025, with a year-to-date decline of approximately 7.8% amid high interest rates and softer demand for large home improvement projects. Tariffs have added cost pressure, prompting "modest" price increases in select categories, though the company notes that more than half of its products are sourced domestically.
HD Price Action: Home Depot shares were down 4.00% at $343.70 during premarket trading on Monday, according to Benzinga Pro data.
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