​​​​​​​Home Depot Slashes Outlook As Home-Renovation Demand Continues To Crumble

Home improvement retailer Home Depot slashed its full-year earnings outlook after another weak quarter, citing soft big-ticket spending, a paralyzed housing market, and lackluster seasonal demand. Adjusted EPS is now expected to fall 5%, worse than prior guidance. 

Third-quarter comparable sales rose just .2%, far below Bloomberg Consensus estimates of 1.36%. The retailer warned about weak consumer demand as elevated interest rates discourage home buying and remodeling. As a result, consumers are opting for smaller projects rather than upgrading their patios or building new decks. 

Snapshot of the third quarter with Bloomberg Consensus estimates:

Comparable sales: +0.2% (miss; est. +1.36%)

• U.S. comps: +0.1% (miss; est. +1.25%)

Total net sales: $41.35 bn (+2.8% y/y) — modest beat (est. $40.97 bn)

• Includes ~$900 m from recent GMS acquisition

Adjusted EPS: $3.74 (miss; est. $3.84; down from $3.78 y/y)

Average ticket: +1.8% (beat est. +1.1% implied)

Other notables:

• Inventories higher than expected ($26.2 bn vs est. $25.0 bn)

• SG&A expenses up 5.9% y/y, above estimates

Management commentary:

• Miss driven mainly by the absence of storm/hurricane activity (hurt disaster-recovery categories) and failure of anticipated sequential demand improvement to appear

• Ongoing headwinds: consumer uncertainty + continued pressure on the housing market, disproportionately hurting big-ticket home-improvement spending

Updated FY 2026 Guidance (previously issued in Aug 2025)

• Sees sales about +3%, saw about +2.8%

• Sees operating margin about 12.6%, saw about 13%, estimate 13.3%

• Sees EPS decline about 6%, saw down about -3%

• Sees adjusted EPS decline about 5%, saw down about 2%

Guidance reflects third-quarter underperformance and a continuation in the home improvement downturn, as we’ve pointed out in recent weeks:

• Consumer Squeeze Hits Home Renovation Spending As Leading Deck-Maker Shares Collapse

• Home Improvement Downturn Flashes Red For Housing Market

Shares of Home Depot are slightly lower in premarket trading in New York, though nothing too notable. However, the long-term chart of the stock shows three clear rejections at the $400 level.

Goldman’s top sector specialist Scott Feiler’s first take on Home Depot earnings… 

Will We See Multiple Contraction?: HD stock is -2.5% on a 3% EPS cut.  A slight miss was expected here, but the magnitude of the miss and cut, while not huge, does feel slightly worse. It feels just weak enough to make investors really question how quickly to defend the name and slower to play for the 2026 recovery. While the stock being down makes sense, a price reaction more than the 3% cut will likely draw out some interest, given the stock is already -16% off September highs.

On Monday, Feiler told clients this would be a “very important week” for the consumer space. With Home Depot reporting weak demand for big-ticket items, here’s what comes next (read the report).