Home Depot says core shopper is resilient in the face of higher gas prices, sales rise 5%

Home Depot said Tuesday its core homeowner shopper remains resilient in the face of higher gas prices and plummeting consumer confidence, leading the retailer to reaffirm its full-year guidance after beating fiscal first-quarter expectations. 

"The homeowner in a relevant sense is perhaps more protected financially than other customer cohorts and so we continue to see engagement," finance chief Richard McPhail told CNBC in an interview. 

Still, in the face of rising geopolitical tensions, plummeting consumer confidence and a broken housing market, those shoppers are engaged "up to a certain point," said McPhail. 

"They continue to tell us that they are going to defer their spend on larger projects," he said. "That's consistent with what they've told us the last few years." 

Here's how Home Depot did compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: $3.43 adjusted vs $3.41 expected
• Revenue: $41.77 billion vs. $41.52 billion expected

The company's reported net income for the three-month period that ended May 3 was $3.29 billion, or $3.30 per share, compared with $3.43 billion, or $3.45 per share, a year earlier. Excluding one-time items including costs related to the value of certain intangible assets, Home Depot reported adjusted earnings per share of $3.43.

Sales rose to $41.77 billion, up almost 5% from $39.86 billion a year earlier. 

The company said it continues to expect fiscal 2026 sales to grow between 2.5% and 4.5%, compared to expectations of roughly 4%, according to LSEG. It's expecting adjusted earnings per share to grow as much as 4%, compared to expectations of 2.4% growth, according to LSEG. 

Home Depot and the home improvement sector overall has been under pressure as it has contended with lower housing turnover, economic uncertainty and an ongoing delay in pricier projects. 

Earlier this year, there was optimism that Home Depot could see a reprieve as mortgage rates started to dip, but those hopes were dashed after the conflict in the Middle East began, leading mortgage rates to spike once again. 

In the meantime, Home Depot has been focused on winning over more pro shoppers, like contractors and roofers, which currently make up about 50% of its revenue. In 2024, the retailer acquired SRS Distribution, a company that sells supplies to roofing, landscaping and pool professionals, for $18.25 billion, and last year, it bought GMS, a specialty building products distributor. 

Last week, SRS completed its acquisition of Mingledorff's, a wholesale distributor of HVAC equipment, parts and supplies that serves residential and commercial customers. The deal allows Home Depot to tap into a total addressable market worth around $100 billion, it said.

"All of the things we're doing to build out our pro capabilities — and through the acquisitions we've made over the past several years — is to help us gain more share in the $700 billion pro market," said McPhail. "We have a right to win that $700 billion, but we just don't quite have the ability to win yet."