The Home Depot (HD) Q2 2025 earnings summary

Executive summary

• Second quarter sales reached $43.2 billion, up 0.6% year-over-year, including $1.3 billion from the SRS acquisition.

• Comparable sales declined 3.3% overall and 3.6% in the U.S., reflecting weaker demand for larger home improvement projects.

• Net earnings were $4.6 billion ($4.60 per diluted share), down from $4.7 billion ($4.65 per share) year-over-year; adjusted diluted EPS was $4.67, nearly flat from $4.68 in the prior year period.

• SRS Distribution contributed high single-digit top-line growth and is expected to accelerate future sales and earnings.

• Management cited higher interest rates and macroeconomic uncertainty as factors pressuring consumer demand.

Financial highlights

• Gross margin improved 40 basis points to 33.4%, driven by lower transportation costs and shrink, partially offset by SRS mix.

• Operating margin was 15.1%, down from 15.4% last year; adjusted operating margin was 15.3%.

• Net earnings for the first six months were $8.2 billion, down 4.3% from the prior year.

• Inventory turns increased to 4.9x from 4.4x, with inventories at $23.1 billion.

• Online sales grew 3.9% in Q2 and 3.6% in six months; now 14.9% and 15.1% of net sales, respectively.

Outlook and guidance

• Fiscal 2024 total sales growth expected between 2.5% and 3.5%, including SRS and a 53rd week.

• Comparable sales projected to decline 3% to 4% for the 52-week period.

• Gross margin expected at 33.5%; operating margin between 13.5% and 13.6%; adjusted operating margin 13.8%-13.9%.

• Adjusted diluted EPS for the 53-week year expected to decline 1%-3% from fiscal 2023, with the extra week contributing ~$0.30.

• Plan to open approximately 12 new stores in 2024.