Home Depot Profit Dips Amid Economic Woes

Home Depot experienced a decrease in its fiscal fourth-quarter profit, largely due to prevailing economic uncertainty, elevated interest rates, and a sluggish housing market that have tempered home improvement activity. Chief Financial Officer Richard McPhail noted that consumer uncertainty and "frozen housing conditions" are influencing spending habits, even though homeowners remain a financially stable consumer group.

Last year, Home Depot implemented price increases on certain items to counteract tariffs, which McPhail acknowledged affected demand but does not plan further hikes. The company has observed that economic factors such as declining home prices and a less robust job market are causing homeowners to postpone remodeling. Additionally, high interest rates have curtailed discretionary upgrades often financed, and a stalled housing market limits renovation projects tied to property sales.

Despite current challenges, McPhail remains optimistic about the long-term outlook for the home-improvement market, citing the aging housing stock and high home-equity values as supportive fundamentals. However, the timing of a recovery in remodeling activity remains uncertain, with only "very slight thawing" signs in home prices and mortgage rates.

For the fourth quarter, net income was $2.57 billion, or $2.58 a share, down from $3 billion, or $3.02 a share, in the prior year. Sales fell 3.8% to $38.2 billion, slightly exceeding the $38.09 billion forecast. The company reaffirmed its fiscal 2026 guidance, expecting comparable-sales growth between flat and 2%, with adjusted earnings-per-share growth also projected between flat and 4%.