Core Insights - Home Depot reported better sales but lower profits than expected, leading to a 3% decline in stock price and approximately 11% year-to-date losses [1][4] - The company cited a sluggish housing market and lack of storms as key factors impacting demand for home improvement products [2][7] Financial Performance - Adjusted earnings per share for the third quarter were $3.74, down 4 cents year-over-year, and below analyst expectations, while revenue was $41.35 billion, exceeding estimates [1][4] - Comparable store sales increased by only 0.2%, falling short of the anticipated 1.4% growth [1] Future Outlook - Home Depot raised its full-year sales growth forecast to approximately 3%, up from 2.8%, with expectations of $2 billion in sales from the recently acquired distributor GMS [4] - The company now anticipates adjusted earnings per share to decline by about 5% year-over-year, a revision from the previously expected 3% drop, due to ongoing consumer uncertainty and housing market pressures [4] Market Implications - As the largest home improvement retailer, Home Depot's results may indicate broader trends in the housing market and shifts in demand for home improvement projects [3] - Analysts from JPMorgan noted that Home Depot's performance could suggest potential challenges for rival Lowe's in its upcoming earnings report [5]

Welcome to Yahoo Finance's flagship show, Morning Brief. I'm Julie Heyman. Let's get to the three things you need to know today.First up, US stock futures extending losses for a fourth day. Growing concerns over stock valuations and interest rate uncertainty continue to weigh on investor sentiment. Equities are now also facing technical pressure.The S&P 500 and NASDAQ both closed below their 50-day moving averages. That could be a sign of more weakness ahead. Plus, the slide in Bitcoin continues.The digital ...

Shares of blue chip Home Depot Inc (NYSE:HD) are off 3.9% to trade at $345.93, after the home improvement chain reported adjusted third-quarter earnings of $3.74 per share, which fell short of estimates. While revenue topped forecasts, Home Depot also slashed its full-year outlook, citing weak demand and less storm damage to homes of late. The report has sector peer Lowe's (LOW) also in the red today.Should these losses hold, HD will be headed for a fifth-straight drop and worst single-session performance s ...

Market Analysis by covering: Home Depot Inc. Read 's Market Analysis on Investing.com ...

Economic Reports and Market Outlook - A heavy economic schedule in the US includes various reports such as the ADP weekly employment report, industrial production, and the FOMC meeting minutes, indicating a focus on labor market conditions and consumer sentiment [1][2][3] - The markets are anticipating Nvidia's earnings report for insights on the AI outlook, along with earnings from Walmart and Target to gauge consumer spending health [2] Labor Market and Interest Rates - US weekly initial unemployment claims were reported at 232,000, with continuing claims rising by 10,000 to a two-month high of 1.957 million, suggesting potential labor market weakness [2] - The 10-year T-note yield fell by 4 basis points to 4.09% following the ADP report indicating an average job loss of 2,500 per week, which may bolster the outlook for further interest rate cuts by the Fed [3][8] Stock Market Performance - US stock indexes, including the S&P 500, Dow Jones, and Nasdaq 100, fell to one-month lows, driven by weakness in technology stocks and concerns over high valuations [4][5] - The S&P 500 Index decreased by 0.51%, while the Dow and Nasdaq indexes fell by 0.86% and 0.90%, respectively, reflecting a broader market decline [5] Corporate Earnings and Performance - The Q3 earnings season is nearing completion, with 82% of S&P 500 companies exceeding forecasts, resulting in a 14.6% increase in earnings, significantly above the expected 7.2% [6] - Home Depot's stock fell over 3% after reporting Q3 comparable sales growth of only 0.2%, below the consensus of 1.36%, and cutting its full-year operating margin estimate [13] Notable Stock Movements - Major tech stocks, including Amazon and Microsoft, declined over 1% following downgrades, while other tech giants like Meta, Tesla, and Nvidia also saw losses [11][12] - Medtronic's stock rose over 4% after reporting Q2 revenue of $8.96 billion, surpassing the consensus estimate of $8.87 billion [15]

Home Depot's third-quarter was mixed with fewer violent storms reaching shore, more anxiety among U.S. consumers, and a housing market that is in a deep funk. ...

Financial Data and Key Metrics Changes - Total sales for the third quarter were $41.4 billion, an increase of 2.8% from the same period last year [5][20] - Comp sales increased by 0.2% year-over-year, with U.S. comps up 0.1% [5][20] - Adjusted diluted earnings per share were $3.74, down from $3.78 in the same quarter last year [5][23] - Gross margin was 33.4%, flat compared to the third quarter of 2024 [20] - Operating margin decreased to 12.9% from 13.5% in the same quarter last year [21][24] - Return on invested capital was 26.3%, down from 31.5% in the third quarter of fiscal 2024 [24] Business Line Data and Key Metrics Changes - Nine of the 16 merchandising departments posted positive comps, including kitchen, bath, outdoor garden, and appliances [14] - Comp average ticket increased by 1.8%, while comp transactions decreased by 1.6% [14] - Big ticket comp transactions (over $1,000) increased by 2.3% compared to the previous year [14] - Online comp sales increased approximately 11% year-over-year [16] Market Data and Key Metrics Changes - Comps in Canada and Mexico posted positive results in local currency [5][20] - Comp sales in the U.S. were +0.1% for the quarter, with variations of +2.2% in August, +0.3% in September, and -1.7% in October [20] Company Strategy and Development Direction - The company is focused on controlling internal factors and believes it is gaining market share [6][7] - The acquisition of GMS is expected to enhance the company's position in the building materials distribution market [7] - The company plans to continue investing in its business, targeting capital expenditures of approximately 2.5% of sales for fiscal 2025 [25] Management's Comments on Operating Environment and Future Outlook - Management revised guidance for fiscal 2025 due to softer-than-expected results and ongoing consumer uncertainty [6][24] - The lack of storm activity has significantly impacted home improvement demand [5][34] - Management noted that housing activity is at 40-year lows, affecting consumer behavior [36] - The company expects total sales growth of approximately 3% for fiscal 2025, with GMS contributing about $2 billion in incremental sales [24][25] Other Important Information - Merchandise inventories were $26.2 billion, up approximately $2.3 billion compared to the third quarter of 2024 [23] - The company opened three new stores, bringing the total store count to 2,356 [23] Q&A Session Summary Question: Impact of GMS on EBIT dollar shortfall - Management explained that the inclusion of GMS and transaction expenses contributed to a 20 basis point impact on operating margin [28][29] Question: Expectations for demand recovery - Management indicated that demand recovery is unlikely without increased housing activity or reduced interest rates [48][50] Question: Average ticket and promotional activity - Management noted that the increase in average ticket was due to customers trading up for innovation, with promotional activity remaining consistent year-over-year [40][41] Question: Margin structure improvement from acquisitions - Management discussed the potential for margin recovery through synergies and cross-selling opportunities between SRS and GMS [74][87] Question: Regional performance and consumer fatigue - Management observed no specific fatigue in upper-income customers but noted a softening in larger project backlogs [85] Question: Cross-selling opportunities post-GMS integration - Management highlighted successful account handoffs and cross-selling between Home Depot and GMS, indicating strong collaboration [91]

Financial Data and Key Metrics Changes - Total sales for the third quarter were $41.4 billion, an increase of 2.8% year-over-year [5][20] - Comparable sales increased by 0.2%, with U.S. comps up 0.1% [5][20] - Adjusted diluted earnings per share were $3.74, down from $3.78 in the same quarter last year [5][23] - Gross margin was 33.4%, flat compared to the previous year [20] - Operating margin decreased to 12.9% from 13.5% year-over-year [21][24] - Return on invested capital was 26.3%, down from 31.5% [24] Business Line Data and Key Metrics Changes - Nine out of 16 merchandising departments posted positive comps, including kitchen, bath, and outdoor garden [14] - Comp average ticket increased by 1.8%, while comp transactions decreased by 1.6% [14] - Big ticket comp transactions (over $1,000) were positive at 2.3% [14] - Online comp sales increased approximately 11% year-over-year [16] Market Data and Key Metrics Changes - Comps in Canada and Mexico were positive in local currency [5][20] - Comp sales progression showed positive results in August (2%), September (0.5%), but negative in October (-1.5%) [20] Company Strategy and Development Direction - The company is focused on controlling operational aspects and believes it is gaining market share [6][7] - The acquisition of GMS enhances the company's position as a multi-category building materials distributor [7] - The company plans to continue investing in business initiatives and customer experience [8][19] Management's Comments on Operating Environment and Future Outlook - Management revised guidance for fiscal 2025 due to softer-than-expected results and ongoing consumer uncertainty [6][24] - The lack of storm activity has significantly impacted home improvement demand [5][34] - Management expects total sales growth of approximately 3% for fiscal 2025, with GMS contributing about $2 billion [24] Other Important Information - The company opened three new stores, bringing the total to 2,356 [23] - Merchandise inventories were $26.2 billion, up approximately $2.3 billion year-over-year [23] Q&A Session Summary Question: Impact of GMS on EBIT shortfall - Management explained that the inclusion of GMS and transaction expenses contributed to a 20 basis point impact on operating margin [28][29] Question: Consumer demand recovery without housing activity - Management indicated that ongoing consumer uncertainty and housing pressure are affecting home improvement demand [34][50] Question: Average ticket and promotional activity - Management noted that the increase in average ticket was due to customers trading up for innovative products, with promotional activity remaining consistent year-over-year [40][41] Question: Margin structure improvement from acquisitions - Management discussed the potential for margin recovery through synergies and cross-selling opportunities between SRS and GMS [74][87] Question: Regional differences in consumer behavior - Management observed that storm and weather patterns were the most significant regional differences, with no specific fatigue noted in the upper-income customer base [85]

Financial Data and Key Metrics Changes - Total sales for Q3 2025 were $41.4 billion, an increase of 2.8% year-over-year, with adjusted diluted earnings per share at $3.74 compared to $3.78 in the same quarter last year [4][20] - Comp sales increased by 0.2% year-over-year, with U.S. comp sales up 0.1% [4][18] - Gross margin remained flat at 33.4%, while operating margin decreased to 12.9% from 13.5% year-over-year [18][19] - The effective tax rate was 24.3%, slightly down from 24.4% in Q3 2024 [19][20] Business Line Data and Key Metrics Changes - Nine out of 16 merchandising departments posted positive comps, including kitchen, bath, outdoor garden, and appliances [11] - Comp average ticket increased by 1.8%, while comp transactions decreased by 1.6% [11][12] - Online comp sales increased approximately 11% year-over-year, indicating strong performance in digital platforms [13] Market Data and Key Metrics Changes - In local currency, Canada and Mexico posted positive comps, while U.S. comps showed mixed results with positive growth in August and September but negative in October [18] - The company noted that the lack of storm activity significantly impacted sales in categories like roofing and plywood [11][18] Company Strategy and Development Direction - The company is focused on controlling operational aspects and investing in business growth, including the acquisition of GMS to enhance its market position [5][22] - Strategic initiatives are aimed at improving customer experience and operational efficiency, with a focus on pro customers through new tools and technology [9][10] - The company plans to continue investing approximately 2.5% of sales back into the business for fiscal 2025 [23] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns over consumer uncertainty and ongoing pressure in the housing market, which are affecting home improvement demand [4][31] - The company revised its fiscal 2025 guidance, expecting total sales growth of approximately 3% and adjusted diluted earnings per share to decline by about 6% compared to fiscal 2024 [22][23] - Management believes that despite current challenges, the company is gaining market share and is well-positioned for future growth [34] Other Important Information - The company opened three new stores, bringing the total store count to 2,356 [20] - Merchandise inventories increased to $26.2 billion, reflecting a $2.3 billion increase year-over-year [20] Q&A Session Summary Question: Impact of GMS on EBIT shortfall - Management explained that the inclusion of GMS and associated transaction expenses contributed to a 20 basis point impact on operating margin, affecting the fiscal year guidance [26][27] Question: Consumer demand expectations - Management noted that the lack of storm activity was a primary driver of sales pressure, and while they expected demand to pick up, ongoing consumer uncertainty remains a challenge [30][31] Question: Average ticket and promotional activity - Management indicated that the increase in average ticket was due to customers trading up for innovative products, with promotional activity remaining consistent year-over-year [39][40] Question: Margin structure improvement for GMS and SRS - Management highlighted that while there is current margin pressure, synergies from cross-selling between GMS and SRS could lead to long-term margin improvements [72][86] Question: Regional performance and consumer fatigue - Management observed no significant fatigue in upper-income customers but noted a softening in larger project backlogs among pros [83]

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