Here’s why Home Depot (HD) remains confident in a dynamic environment

Shares of The Home Depot (NYSE: HD) dropped 1% on Wednesday. The stock has dropped 6% in the past three months. The home improvement retailer delivered mixed results for the first quarter of 2025 as it continues to face an uncertain macroeconomic environment. Nevertheless, the company remains confident that it can navigate this current landscape.

Q1 performance

In the first quarter of 2025, Home Depot’s sales increased 9.4% to $39.9 billion compared to the same period a year ago. Comparable sales declined 0.3%. Adjusted earnings decreased 3% year-over-year to $3.56 per share.

Navigating challenges

During the first quarter, Home Depot saw consumers engage in smaller home remodeling activities and spring projects but larger remodeling projects remain pressured by higher interest rates. Discretionary projects like kitchen and bath remodels, which usually require financing, continued to see softer engagement. The company remains optimistic on spring-related demand continuing in the second quarter.

HD believes it is well-positioned to navigate the current macroeconomic environment, with vast opportunity in a highly fragmented market and a healthy consumer with stable jobs and wages. The appreciation in home prices along with an aging housing stock, which will require maintenance and updates, gives it further confidence.

Home Depot continues to see strong performance from SRS, which generated $2.6 billion in sales for the first quarter. SRS delivered better-than-expected growth in its main verticals and continues to gain share. It is also yielding gains in the Pro segment. Home Depot expects SRS to deliver mid-single-digit sales growth for fiscal year 2025.

Home Depot believes it has significant flexibility in terms of its sourcing strategy. Currently, over 50% of its purchases are sourced in the United States. The company has been working to diversify its global supply chain and it anticipates that a year from now, no single country outside the US will represent more than 10% of its purchases. Against this backdrop and the current tariff situation, Home Depot does not plan to increase its prices, whilst seeing opportunity to gain share in this environment.

Outlook

Home Depot expects total sales to grow approx. 2.8% in fiscal year 2025. Comparable sales are expected to grow approx. 1% for the comparable 52-week period. Adjusted EPS is projected to decline approx. 2% YoY.