Home Depot beats Q4 expectations even as housing market remains challenged

Retail Dive · Courtesy of The Home Depot

Caroline Jansen

Tue, February 24, 2026 at 9:28 PM GMT+9 2 min read

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Dive Brief:

The Home Depot on Tuesday reported fourth quarter sales fell 3.8% year over year to $38.2 billion. The fourth quarter of the retailer’s fiscal year 2025 included 13 weeks compared to the year prior, which included an extra week and added about $2.5 billion in sales. Comparable sales increased 0.4%, while U.S. comps inched up 0.3%.

The home improvement retailer’s profits took a hit: In Q4, net income fell 14.2% to $2.6 billion and operating income declined 14.4% to $3.8 billion. For the year, net income fell 4.4% to $14.2 billion and operating income declined 3% to $20.9 billion.

Home Depot’s sales increased 3.2% year over year to $164.7 billion for the full year, while full-year comps increased 0.3% and U.S. comps grew 0.5%.

Dive Insight:

While Home Depot continues to operate against a challenging housing market, the retailer beat analysts’ expectations in the fourth quarter.

The company comped positively in eight of its 16 merchandising departments in Q4, including power, electrical, storage, indoor garden and hardware, according to Executive Vice President of Merchandising Billy Bastek.

However, larger discretionary projects continued to be under pressure, Bastek said, as housing turnover remained at historic lows, reducing demand for projects and other purchases associated with buying and selling homes.

The sluggish housing market — which accounted for 6.3% fewer transactions in Q4 compared to a year ago, per GlobalData research — has also disrupted the replacement cycle of certain purchases, CEO Ted Decker said.

“With turnover down and people still wanting to move, they’re not spending as much in their home if they anticipate moving in the next year or two, so there’s maybe a bit more repair than replace,” Decker said on a call with analysts.

Ever-evolving tariff policies continue to pose uncertainty for retailers even after the Supreme Court on Friday ruled against President Donald Trump’s use of the International Emergency Economic Powers Act to impose open-ended tariffs. While Home Depot is monitoring any potential impacts, executives reiterated that over 50% of its products are sourced domestically and haven’t been subject to tariffs.

“Obviously, the announcement on Friday and then the administration over the weekend — we’re still analyzing the impacts of those decisions. I can tell you that we’re going to continue to be the customer’s advocate for value,” Bastek said. “We’re mostly done with tariff-related pricing actions as it relates to the impacts back to April.”

Looking ahead, the company reiterated its fiscal 2026 guidance projecting total sales to increase between 2.5% and 4.5% and comps to be flat to up 2%. The retailer expects capital expenditures to be 2.5% of total sales and plans to open 15 new stores.

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