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Home Depot doesn’t need a weatherman to know which way the wind blows. Its Q3 earnings were up for the first time in eight quarters, but the improvement in its fortunes may have more to do with the weather than with a shift in consumer sentiment.
Its prospects rose enough in Q3 for it to beat analysts’ expectations and raise its guidance for the full fiscal year.
Sales were up 6.6% over Q3 of 2023, the retailer said in a press release, enough of a bump for it to revise its full-year sales guidance from 2.5-3.5% to 4%. It now forecasts a 1% drop in EPS, compared with the 1-3% decline it foresaw earlier in the year.
“As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects,” chair, president, and CEO Ted Decker said during an earnings call. Dry weather meant that professionals weren’t losing work days to rain, he observed. The retailer also saw a boost in sales as consumers prepared for hurricanes and cleaned up afterwards.
High interest rates and economic uncertainty are still causing consumers to hold off on large home improvement projects, Decker said. Mortgages remain high, he said, dampening the effect of the Fed’s decision to cut rates.
Tariff trouble?: Home Depot is preparing for possible headwinds from tariffs during the second Trump administration, Decker said. The retailer sources “more than half” of its goods from North America, he said, “but there will certainly be an impact.”
“We do source from several Asian countries, so we’re watching it closely,” CFO Richard McPhail told CNBC. “We’ve been focused on diversifying sourcing for years, and we’ll continue to assess sourcing decisions going forward.” Home Depot has faced high tariffs before, Decker said, and Billy Bastek, EVP of merchandising, also speaking on the earnings call, said the company would likely “manage through any new tariffs” in a similar fashion.