Home Depot Inc (NYSE:HD, XETRA:HDI) on Tuesday issued preliminary guidance for fiscal 2026 on Tuesday, signaling a cautious outlook amid a slow housing market.
The company projects comparable sales growth of flat to 2%, total sales growth of 2.5% to 4.5%, operating margins of 12.4% to 12.6%, and diluted earnings per share (EPS) growth of flat to 4%.
The outlook assumes a home improvement market growing between -1% and +1%.
The guidance falls short of analyst expectations, which called for 2.34% comparable sales growth and 5.6% EPS growth.
During a call with investors, management cited persistent high interest rates curbing big-ticket spending on home improvement projects and a weak housing market suppressing demand for higher-end DIY and professional products, leaving the sector in a “frozen state.”
The company also outlined a “Market Recovery Case” tied to housing momentum, projecting 5% to 6% total sales growth, 4% to 5% comparable sales growth, operating profit growth faster than sales, and mid-to-high single-digit EPS growth.
For fiscal 2025, Home Depot reaffirmed guidance for roughly 3% total sales growth, slightly positive comparable sales, a gross margin of 33.2%, and an operating margin of 12.6%.
Diluted EPS is expected to decline about 6% from $14.91 in fiscal 2024, with plans for roughly 12 new stores and capital expenditures at 2.5% of sales.
"We are focused on growing sales and delivering exceptional shareholder returns, supported by our culture and values," Home Depot CEO Ted Decker said in a statement. "The investments we've made over the last several years have further strengthened our distinct competitive advantages and position us well to grow share in an approximately $1.1 trillion total addressable market."
Home Depot shares were little changed at $351 following the update.