Home Depot stock rises 4% as retailer maintains full-year forecast

Eduardo Munoz Alvarez | Corbis News | Getty Images Depot stuck by its full-year outlook on Tuesday, even as the company came in slightly shy of Wall Street's expectations for quarterly earnings and revenue

However, it missed Wall Street's earnings expectations for the second straight quarter. s of Depot rose 4% in early trading.Here's what Depot reported for the fiscal second quarter compared with Wall Street's estimates, according to a survey of analysts by LSEG:Earnings per : $4.68 adjusted vs. $4.71 expected Revenue: $45.28 billion vs. $45.36 billion expectedIn the three-month period that Aug. 3, Depot's net income was $4.55 billion, or $4.58 per , down slightly from $4.56 billion, or $4.60 per , in the year-ago period

Adjusting for one-time items, including related to the value of intangible assets, Depot reported earnings of $4.68 per .The report is Depot's first since May 2014 to fall short on both earnings and revenue expectations

Depot's results reflect that the company is still waiting for a greater pickup in imvement activity, whether spurred on by higher housing turnover, lower mortgage rates or consumers' own shift in mentality

In an interview with CNBC, Chief Financial Officer Richard McPhail said the company continues to see the effects of a "deferral mindset" from owners, which began in roughly mid-2023.Still, McPhail said, there are encouraging signs in the retailer's : Big-ticket transactions, which the company defines as over $1,000, rose 2.6% compared with the year-ago quarter

Twelve of its 16 merchandising departments posted year-over-year sales gains

And year-over-year sales trends imved in each month of the quarter, with comparable sales up 0.3% in May, 0.5% in June and 3.3% in July, he said."We absolutely saw momentum continue to build in our core throughout the quarter," he said.McPhail said Depot's fiscal 2025 outlook does not factor in potential rate cuts by the Federal Reserve, which could spur borrowing for buying and bigger jects. "We don't embed any point of view on the rate environment changing, nor on the demand for large jects changing," he said

On the company's earnings call, CEO Ted Decker said "some relief on mortgage rates, in particular, could help." But he added that's not the only factor on consumers' minds when Depot surveys its customers and s."The No. 1 reason for deferring the large ject is general economic uncertainty," he said. "That, you know, is larger than prices of jects, of labor availability, all the various things we've talked in the past by a wide margin."Betting on the sAs the real estate market remains sluggish and borrowing costs remain high, Depot has looked beyond the owners who come to its stores to buy kitchen appliances, cans of paint or other supplies for do-it-yourself jects

It announced in June that it was buying GMS, a specialty building ducts distributor, for $4.3 billion

The GMS deal is expected to close by the end of Depot's fiscal year in late January, according to Depot.McPhail said 55% of Depot's sales come from s and 45% comes from do-it-yourself customers, when including SRS

Depot said foreign exchange rates negatively impacted the company's comparable sales by 0.4%.That comparable sales growth marks only the second quarter out of the last 11 that Depot has reported year-over-year imvement — marking its strongest performance in more than two years.For the fiscal second quarter, McPhail said year-over-year sales on both the side and DIY side of the grew

He declined to percentage increases, but said those increases were "relatively in line with one another." Depot saw strength in that tend to be with s, such as lumber, concrete and decking, said Billy Bastek, executive vice president of merchandising, on the company's earnings call

On the do-it-yourself side of the , seasonal ducts grills and goods from the gardening category did well, he said.Online sales rose 12% from the year-ago quarter, Bastek said

He attributed some of that to the company's faster dery speeds.Tariffs have added uncertainty to the outlook for retailers, though

McPhail told CNBC in May that Depot did not plan to hike prices across its store, even as other retailers, including Walmart, warned that tariff-related costs would be too much to absorb.Since May, however, U.S. tariff policies have changed

Higher tariffs began in early August on dozens of U.S. trading partners

Other major agreements remain in flux

President Donald Trump last week delayed higher U.S. tariffs on Chinese goods for another 90 days as negotiations continue.McPhail told CNBC that Depot hasn't changed its pricing apach

And, he said, most of its imported ducts sold in the quarter landed ahead of tariffs

Those metrics exclude results from acquisitions SRS and HD Supply, the company said

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