Home Depot CFO: Consumers “have the means to spend, they’re just hesitant”

Consumers are holding off on big-ticket items like remodeling projects. Uncertainty, combined with what Home Depot CFO Richard McPhail described to CNBC as “frozen” housing market conditions, has made major home improvement retailers cautious about their prospects for the remainder of 2026.

In the Q2 2026 earnings call on Tuesday, Home Depot reiterated its guidance for the full year, and a day later competitor Lowe’s revised its outlook to the lower end of what it had previously stated.

Overall, Lowe’s Q2 results were mixed. It failed to beat expectations for revenue, though total sales were up 8% year over year, to $26 billion. Same-store sales rose only 0.2%, but Lowe’s surpassed expectations for EPS.

Home Depot beat projections for both revenue and EPS. Its sales were up 5.7% YoY, to $47.9 billion, and its same-store sales rose 1.3% in the US and 1.7% companywide.

Wary consumers. Executives at both retailers said that customers were opting for smaller projects over large-scale renovations.

Consumers “have the means to spend, they’re just hesitant,” Home Depot’s McPhail told CNBC. “They do tell us they’re worried about inflation, about fuel costs, and about general uncertainty, and so there is a little bit of hesitancy there as the project gets bigger.” (McPhail and senior executive vice president Ann-Marie Campbell are leading Home Depot while CEO Ted Decker is on medical leave.)

A Lowe’s survey of pro customers likewise showed that homeowners are gravitating toward smaller fixes, EVP of stores Joe McFarland said on Wednesday’s earnings call.

On the Home Depot call McPhail pointed out that housing turnover “has been at historical lows,” later observing, “there remains tremendous pressure on our sector and on anyone connected with housing.”

Tariff refunds. Home Depot received $730 million in IEEPA tariff refunds during the quarter, but other macroeconomic factors mean it won’t make much of a dent. The retailer experienced “unplanned pressure from fuel, energy, and other product impact costs that we expect will fully offset the benefit from tariff refunds over the year,” McPhail said.

Lowe’s was affected by the refunds in a different way: It faced competition in July as rivals used tariff refunds to lower prices on seasonal items like patio furniture, grills, and plants, CEO Marvin Ellison said on the earnings call. The retailer may try a similar tactic once its refunds come in, Ellison told CNBC, noting that it will “think first about how we’re going to share those with the customer.”