The Home Depot, Inc. Q4 FY2026 earnings call

Ted Decker noted sales and comps trends, regional performance, and that fourth quarter results were largely in line with expectations. Ann-Marie Campbell talked about associates serving customers during Winter Storm Fern, focus on core and culture, enabling tools for associates to serve customers better, transitioning tasking to MET team for increased labor productivity, realigning store positions for better customer experience. William Bastek discussed merchandising department comp performance, online comp sales growth, enhancements in delivery reliability, successful events like Gift Center and Black Friday, upcoming spring selling season with innovative products, live goods program. Richard McPhail provided details on fiscal 2025 vs 2024 week differences, fourth quarter and full-year sales, comps, margins, operating expenses, earnings per share, store count, inventory, capital allocation, and dividend increase.

Sales for fiscal 2025 were $164.7 billion, up 3.2% from prior year. Comp sales increased 0.3% overall, with U.S. comps up 0.5%. Fourth quarter comp sales up 0.4% in U.S. Regional performance varied: Northern and Western divisions had positive comps; Mexico had positive local currency comps, Canada had negative. SRS grew organic sales low single-digit in 2025, expected mid-single-digit growth in 2026. Fourth quarter total sales $38.2 billion, down $1.5B or 3.8% y-o-y. U.S. comps positive 0.3% for quarter. Gross margin in fourth quarter ~32.6%, down ~20 bps y-o-y. Operating margin for fourth quarter 10.1%, down from 11.3% y-o-y. Adjusted diluted EPS for fourth quarter $2.72, down from $3.13 y-o-y. For fiscal 2025, adjusted diluted EPS $14.69, down from $15.24 y-o-y. Inventory at end of quarter $25.8B, up ~$2.4B y-o-y.

Expect total sales growth of approximately 2.5% to 4.5% in fiscal 2026, comparable sales growth of approximately flat to 2%, adjusted diluted earnings per share to grow approximately flat to 4%. Expect SRS to deliver mid-single-digit percent organic sales growth. Plan to open approximately 15 new stores and 40 to 50 new SRS locations. Gross margin expected to be approximately 33.1%. Operating margin expected to be approximately 12.4% to 12.6% and adjusted operating margin approximately 12.8% to 13%. Effective tax rate targeted at approximately 24.3%. Net interest expense expected at approximately $2.3 billion. Diluted earnings per share and adjusted diluted earnings per share expected to both increase approximately flat to 4% compared to fiscal 2025. Plan to continue investing in business with capital expenditures of approximately 2.5% of sales for fiscal 2026.

Risks include factors identified in the most recent annual report on Form 10-K and other SEC filings, such as consumer uncertainty and pressure on housing, which impact home improvement demand. Also, continued consumer uncertainty, job concerns, higher financing costs, and potential impact of housing turnover and price changes on home improvement activity. Tariff environment and its potential impact on costs and pricing is also a risk. Additionally, the impact of weather events and their potential effect on sales and operations.

Q: Steven Forbes asked about digital planning tools and initiatives to improve Pro value proposition.

A: Ted Decker and Michael Rowe discussed maturing sales force, order management, trade credit platform, delivery improvements, AI tools for project management, and continued momentum in Pro.

Q: Zach Fadem asked about market performance in Florida, Texas, etc.

A: Edward Decker talked about comp performance stability, impact of storms, and regional performance based on price and turnover.

Q: Michael Lasser asked about SRS pricing and gross margin volatility.

A: Edward Decker and Richard McPhail discussed SRS taking share, impact on gross margin, and guidance.

Q: Simeon Gutman asked about consumer health and Pro capabilities.

A: William Bastek and Michael Rowe talked about consumer behavior, Pro capabilities rollout.

Q: Steven Zaccone asked about same-store sales outlook and big ticket.

A: Richard McPhail and William Bastek discussed ticket, transactions, and big ticket performance.

Q: Zhihan Ma asked about big ticket discretionary projects and inventory.

A: Edward Decker and Richard McPhail talked about big ticket sales trends and inventory drivers