Home Depot (HD): A few points to note about the retailer’s 4Q24 performance

Shares of Home Depot (NYSE: HD) stayed green on Wednesday. The stock has dropped 7% over the past three months. The home improvement retailer delivered better-than-expected earnings results for the fourth quarter of 2024 against a challenging macroeconomic backdrop. However, it remained cautious in its outlook for fiscal year 2025.

Sales and earnings growth

In Q4 2024, Home Depot’s sales increased 14.1% year-over-year to $39.7 billion. Comparable sales rose 0.8% while comparable sales in the US grew 1.3%. GAAP earnings per share grew 7% to $3.02 while adjusted EPS rose 9% to $3.13.

Pickup in home improvement and pressure on large projects

During the fourth quarter, Home Depot benefited from broader engagement across home improvement-related projects, and hurricane-related incremental sales. Hurricane-related sales totaled approx. $220 million in Q4. However, macroeconomic uncertainty and higher interest rates continued to pressure larger remodeling projects.

In Q4, comp transactions and comp average ticket increased 0.6% and 0.2% respectively. Big-ticket comp transactions, or those over $1,000, were up 0.9% year-over-year, but larger discretionary projects like kitchen and bath remodels continued to see softness.

In Q4, both the Pro and do-it-yourself (DIY) customer segments saw positive comp sales. Pro outpaced DIY, with strength across Pro-heavy categories like concrete and fencing. The company’s continued investments in its Pro ecosystem and its efforts to grow its share of wallet with the Pro customer are paying off as it is seeing a meaningful pickup in sales with Pro customers.

Conservative guidance

Home Depot does not anticipate a change in the rate environment or improvements in housing turnover in fiscal year 2025. Hence, it expects the pressure on large remodeling projects to continue during the year. Despite these factors, the company expects its consumer to remain healthy, and the underlying momentum seen in its business during the back half of 2024 to continue into 2025.

The home improvement retailer forecasts total sales growth of 2.8% and comparable sales growth of 1% for fiscal year 2025 versus fiscal year 2024. The top line is expected to benefit from the SRS acquisition and contributions from new stores. SRS is expected to deliver mid-single-digit organic growth for the year.

In FY2025, GAAP EPS is expected to decline approx. 3% and adjusted EPS is expected to decline approx. 2% from FY2024.