The Home Depot, Inc.

First-quarter sales were $41.8 billion, up $1.9 billion or 4.8% year over year. Total company comps increased 0.6% and U.S. comps rose 0.4%; FX added about 55 basis points to comps. Gross margin was 33.0%, down about 75 basis points from last year, operating margin was 11.9% versus 12.9%, and adjusted operating margin was 12.3% versus 13.2%. Reported diluted EPS was $3.30 versus $3.45, while adjusted diluted EPS was $3.43 versus $3.56. The company opened 2 new stores in the quarter, ended with 2,361 stores, and had merchandise inventories of $27.3 billion, up about $1.5 billion year over year; inventory turns were 4.2x versus 4.3x. For fiscal 2026, Home Depot reaffirmed comp sales of flat to 2%, total sales growth of approximately 2.5% to 4.5%, gross margin of about 33.1%, operating margin of about 12.4% to 12.6%, adjusted operating margin of about 12.8% to 13.0%, tax rate of about 24.3%, net interest expense of about $2.3 billion, and EPS/adjusted EPS growth of approximately flat to 4%.

Ted Decker said the quarter was in line with expectations and that underlying demand looked similar to fiscal 2025, even with greater consumer uncertainty and housing affordability pressure. He emphasized continued execution on the core strategy: strengthening stores and culture, improving the interconnected experience, and winning with Pro. He also highlighted the Mingledorff's acquisition as a way to expand the company's HVAC opportunity and deepen Home Depot's reach into a fragmented Pro market.

Richard McPhail said first-quarter gross margin of 33.0% was down about 75 basis points year over year, with the vast majority of the decline reflecting the GMS acquisition and additional pressure from SRS roofing and value investments. He noted operating expense rose about 20 basis points to 21.1% of sales, operating margin was 11.9%, and adjusted diluted EPS was $3.43. On capital allocation, the company spent about $845 million on capex and paid about $2.3 billion in dividends, while ROIC was 25.4% versus 31.3% last year. He also said the company expects some year-over-year margin pressure to persist in Q2 but improve later in the year, while warning that fuel, tariffs, and other cost inputs remain volatile.

Analysts focused on the size of big-ticket project weakness, the role of weather and storms, the impact of higher rates and energy prices, and whether guidance should be lowered. Management said the business is not seeing a marked improvement in underlying demand, but expects a higher comp in the second half from a return to normal store activity and reaffirmed guidance. They also said May trends through the first couple of weeks were similar to February and March, with weather being the main driver of week-to-week volatility.