Home Depot (HD) stock climbed over 2% in premarket trading Tuesday after the home improvement giant reassured investors it won’t be raising prices, even as U.S. tariffs mount under the Trump administration.
Speaking to CNBC, CFO Richard McPhail said the company plans to hold its current pricing levels across its product portfolio. “Because of our scale, the great partnerships we have with our suppliers, and productivity that we continue to drive in our business, we intend to generally maintain pricing levels,” McPhail stated.
That firm stance on pricing comes as other major retailers, including Walmart, have warned customers about upcoming price hikes tied to tariffs on Chinese and other foreign imports. But Home Depot has shifted its sourcing strategy over the years. According to McPhail, no single country outside the U.S. will make up more than 10% of the company’s purchases by this time next year.
Q1 Earnings Miss, but Sales Stay Strong
Despite the confident pricing stance, Home Depot missed Wall Street expectations on earnings for the fiscal Q1 2025, reporting adjusted EPS of $3.56 versus the expected $3.60. However, the company beat revenue estimates, coming in at $39.86 billion vs. $39.31 billion expected.
Net income declined year over year to $3.43 billion from $3.60 billion, reflecting rising costs and mixed category performance. Still, HD stock responded positively thanks to the company reaffirming its full-year sales guidance and reporting a strong spring sales finish.
Spring Black Friday and Pro Business Push
The first quarter, ending May 4, is traditionally Home Depot’s strongest, often considered the “Christmas” of the home improvement world. This year, the company leaned into its Spring Black Friday event, seeing robust sales in appliances, garden, plumbing, and electrical. However, bigger-ticket categories like kitchen and bath remodels were softer, reflecting the impact of high mortgage rates on homeowner renovation behavior.
What offset some of the softness was growth in the pro segment. Home Depot completed its $18.25 billion acquisition of SRS Distribution, a major supplier for professionals in roofing, landscaping, and pool construction. Roughly $2.6 billion of Q1’s year-over-year sales growth came from SRS.
McPhail said this shift is strategic: “Our customer is healthy, and we think that’s what has supported their level of engagement in home improvement.”
Comparable Sales: Signs of a Turnaround?
Comparable sales for Q1 dropped 0.3%, but there were encouraging signs:
- February: -3.3% YoY
- March: +1.3% YoY
- April: +1.8% YoY
The late-quarter rebound, aided by improved weather and seasonal demand, helped support investor confidence in HD stock as the company navigates a cooling housing market.
Tariffs, Sourcing, and Price Discipline
What separates Home Depot from its competitors in the current environment is its refusal to pass on tariff-related costs. Its multi-year strategy to reduce dependence on China is now paying off.
Its pricing restraint stands in sharp contrast to Walmart, which publicly said it will begin raising prices by late May due to higher import duties.
McPhail emphasized that more than 50% of Home Depot’s goods are U.S.-sourced, and the company is committed to keeping price volatility low for consumers, especially during key seasonal sales windows.
What This Means for HD Stock Investors
As of Monday’s close, HD stock was down about 2% YTD, underperforming the S&P 500’s 1% gain. However, Tuesday’s bounce reflects a broader belief in the company’s fundamentals and long-term play toward professional markets and pricing power.
Key Investor Takeaways:
- HD beat revenue expectations but missed on profit
- No price hikes planned despite tariffs
- Q1 comps show signs of turnaround
- SRS acquisition fueling pro-business growth
- Full-year guidance remains unchanged
With the company holding strong on price discipline and pivoting toward service pros, HD stock may be positioned for a stronger second half, especially if the housing market stabilizes or interest rates ease.
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