Home Depot has provided a cautious outlook for the upcoming year during its investor day, indicating that the company anticipates challenges in the near term but remains optimistic about potential growth if the housing market begins to recover. The home improvement giant expects same-store sales for the next fiscal year to remain flat, forecasting a range of 0% to 2% growth, accompanied by revenue growth projected between 2.5% and 4.5%. In terms of adjusted earnings, a modest increase of roughly flat to 4% is expected.
However, the company underscores that if conditions in the housing market improve, particularly if consumers start engaging in bigger-ticket home projects, sales could see a significant increase. In an optimistic scenario, Home Depot anticipates same-store sales growth could reach 4% to 5%, with revenue growth ranging from 5% to 6%, and adjusted earnings growth in the mid-to-high single digits.
CFO Richard McPhail outlined several factors currently pressuring the housing market, particularly the elevated interest and mortgage rates since 2020, which have hampered housing turnover. He described this as the “mortgage lobby effect,” reflecting a situation where homeowners are hesitant to move due to financial constraints. McPhail expressed hope that market dynamics are shifting, with affordability concerns potentially pushing the housing market toward a more balanced state as home prices stabilize.
CEO Ted Decker added that the economic climate has led many consumers to remain in their existing homes, contributing to historically low housing turnover rates since 2023. This stagnation has reduced demand for projects typically associated with buying and selling homes. Nevertheless, the buildup of delayed home improvement projects could create a “pent-up demand” exceeding $20 billion, which could eventually serve as a significant growth driver for the company.
Supporting this optimistic forecast, McPhail noted that a large portion of U.S. homes—55%—are now over 40 years old, suggesting a rising need for maintenance, repairs, and renovations. This trend might further bolster Home Depot’s position as homeowners turn to the retailer for their home improvement needs.
For the current fiscal year, Home Depot confirmed its outlook, maintaining expectations of “slightly positive” same-store sales and a projected decline of 5% in full-year earnings per share. Despite a modest rise in stock prices during early trading, Home Depot shares remain down approximately 10% year to date, reflecting broader concerns within the market.
