Home Depot revenue rises even as customers turn away from bigger projects

By Nora Redmond

Home Depot's stock was up in premarket trading.

Shares of Home Depot rose early Tuesday after the retailer's second-quarter results beat Wall Street expectations even as customers continued to prioritize smaller home-improvement projects over more complex and costly ones.

The company reported revenue of $47.86 billion, a rise of almost 6% from a year earlier and just more than 1% higher than analysts' consensus estimate, according to the London Stock Exchange Group.

Home Depot said earnings per share advanced to $4.79 for the period ended Aug. 2, up from $4.59 for the same period last year, and marginally surpassing the consensus estimate of $4.65.

The retailer's stock (HD) climbed about 1.5% in premarket trading. Shares are down by about 2% overall since the start of the year.

"Our second quarter results exceeded our expectations," Richard McPhail, chief financial officer at the Atlanta-based company, said in a statement. "We saw broad based demand across the business as customers continued to engage in smaller projects."

This comes as the U.S. home-improvement market has been hit with a number of challenges in recent years, including U.S. tariffs on imported goods, labor shortages and perisistent inflation.

McPhail told CNBC that the company, which operates more than 2,000 stores and has a workforce of more than 470,000, is currently operating in what he referred to as "frozen housing-market conditions."

He described the retailer's customers as "healthy" but said they have not yet returned to larger projects. "They've told us they have the means to spend [but are] hesitant," McPhail said.

Home Depot and other big retailers' earnings have long been spotlighted as an indicator of the current health of the U.S. consumer - especially as borrowing costs have hit multiyear highs.

Need to Know: Stocks keep shrugging off rising Treasury yields. Here's the level that could finally trigger a selloff.

Comparable-store sales grew by 1.7% in the second quarter, the company said, and were up 1.3% domestically. Michael Baker, a research analyst at Davidson, wrote in a note on Tuesday that each also metric had increased nicely on a two-year basis.

"That does not mean that we are out of the woods yet with respect to home-related spending, particularly as rates continue to move back up," he said. "But it does show that the worst of the cycle downtrend is likely behind us."

Target (TGT) is set to release results before the opening bell on Wednesday, with revenue growth of about 4% from the year-ago quarter predicted, per LSEG data. Rival Walmart (WMT) is scheduled to report earnings on Thursday ahead of the opening bell. Analysts expect revenue there to increase by 5%.

Home Depot maintained its outlook for the full year, adding that tariff refunds are expected to partially cover unplanned costs from rising fuel and energy prices. It said it sees sales growth of between 2.5% and 4.5%.

-Nora Redmond

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

08-18-26 0832ET