The Home Depot Inc (HD) Q2 2025 Earnings Call Highlights: Strong Revenue Growth Amidst Margin ...

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Revenue: $45.3 billion, up 4.9% from the same period last year. Comp Sales: Increased 1% overall; U.S. comps increased 1.4%. Adjusted Diluted Earnings Per Share: $4.68, compared to $4.67 last year. Gross Margin: 33.4%, a slight increase from the previous year. Operating Margin: 14.5%, down from 15.1% last year; adjusted operating margin was 14.8%. Net Income: Diluted earnings per share were $4.58, compared to $4.60 last year. Store Count: Opened three new stores, bringing the total to 2,353. Inventory: $24.8 billion, up approximately $1.8 billion from last year; inventory turns were 4.6 times. Return on Invested Capital: 27.2%, down from 31.9% last year. Capital Expenditures: Approximately $915 million invested back into the business. Dividends: Approximately $2.3 billion paid to shareholders.

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Release Date: August 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Sales for the second quarter were $45.3 billion, up 4.9% from the same period last year, indicating strong revenue growth. The Home Depot Inc (NYSE:HD) saw positive comps in Canada and Mexico, with US comps increasing by 1.4%, showcasing international and domestic growth. The acquisition of SRS has exceeded expectations, driving market-leading growth and revenue synergies. The pending acquisition of GMS is expected to broaden SRS's distribution footprint and enhance The Home Depot Inc (NYSE:HD)'s Pro ecosystem. Investments in technology and faster delivery options have led to improved customer engagement and market share growth.

Negative Points

Operating margin for the second quarter was 14.5%, down from 15.1% in the second quarter of 2024, indicating a decline in profitability. Diluted earnings per share for the second quarter were $4.58, slightly down from $4.60 in the second quarter of 2024. Inventory turns decreased to 4.6 times from 4.9 times last year, suggesting potential inefficiencies in inventory management. The Home Depot Inc (NYSE:HD) continues to see softer engagement in larger discretionary projects, impacting overall sales growth. Interest and other expenses increased by $61 million to $550 million, which could affect net income.

Q & A Highlights

Q: Can you discuss the improvement in July and the expectations for the second half comp? A: Edward Decker, CEO, explained that the improvement was due to broader engagement across departments and favorable weather, particularly in the north. The company expects a slight uptick in comp sales for the second half, aiming for a 1% growth for the year. Richard McPhail, CFO, added that the momentum from the second quarter has continued into the third quarter, and foreign exchange rates are expected to provide a tailwind.

Story Continues

Q: How might potential rate cuts and tax reforms impact your business? A: Edward Decker, CEO, noted that relief on mortgage rates could help the housing market, which is currently experiencing low turnover rates. Economic uncertainty is the primary reason for deferring large projects. The recent tax package is expected to provide more discretionary spending for consumers. Richard McPhail, CFO, mentioned that the company will benefit from bonus depreciation and R&D extensions, which will be considered in future plans.

Q: With clarity on the tax package and potential rate cuts, how do you view the recovery in large project activity? A: Edward Decker, CEO, expressed optimism that lower taxes and interest rates could improve the housing market. However, it's difficult to predict the exact number that will unlock turnover and mobility in housing. The company is prepared to capitalize on any improvements in the economic environment.

Q: Can you provide more details on the performance of different categories and regions? A: William Bastek, EVP of Merchandising, highlighted that 12 out of 16 departments posted positive comps, with strong performance in seasonal categories like patio and live goods, as well as core home improvement areas such as portable power and dimensional lumber. The northern regions saw increased traffic due to favorable weather.

Q: How do you balance growth and returns in your capital allocation decisions, especially with recent acquisitions like SRS and GMS? A: Richard McPhail, CFO, explained that the company invests in opportunities that drive share capture and earnings growth while ensuring returns exceed the cost of capital. The acquisitions of SRS and GMS expand the total addressable market and are expected to deliver attractive returns. The company is focused on positioning itself to win in the $1 trillion home improvement market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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