Home Depot CFO cites fuel costs and affordability pressures as consumers pivot to smaller DIY projects
The retailer reaffirmed its 2026 outlook, with digital and professional channels outperforming, while high gas prices and economic uncertainty continue to shape consumer spending habits.
Home Depot has reaffirmed its financial guidance for 2026, projecting flat to 2 per cent same-store sales growth and total sales growth between 2.5 per cent and 4.5 per cent. The announcement comes as the retailer navigates a complex consumer landscape defined by elevated fuel costs and broader affordability concerns. CFO Richard McPhail noted that while the average consumer is feeling the pinch of gas prices remaining above $4.50, spending has not ceased but has instead shifted in nature.
In the first quarter, the company reported revenue of $41.8 billion, representing a roughly 5 per cent increase year-on-year, alongside adjusted earnings of $3.43 per share. Both figures surpassed analyst expectations, with earnings beating the consensus estimate of $3.41. However, same-store sales growth of 0.6% slightly missed the Wall Street consensus of 0.9%, reflecting a nuanced shift in how homeowners are allocating their budgets.
McPhail explained that customers are increasingly deferring large-scale renovation projects involving lumber, flooring, and millwork due to economic uncertainty. Instead, spending is concentrating on smaller enhancements, such as painting, which the CFO described as a consistent source of strength. The average ticket size increased by 2.2%, while the total number of transactions declined by 1.3%, underscoring a move towards lower-cost maintenance rather than major capital improvements.
The retailer’s professional business and digital channels outperformed the core do-it-yourself segment. Digital revenue rose 10% year-on-year, a growth McPhail attributed to improvements in the online experience and the implementation of artificial intelligence tools for product recommendations. The professional division continues to benefit from significant investments following the $18.5 billion acquisition of SRS Distribution in 2024 and the recent acquisition of HVAC distributor Mingledorff’s earlier this year.
Despite the strong financial results, Home Depot’s stock fell 2% in early trading, a decline that also weighed on rival Lowe’s shares ahead of their upcoming earnings report. With mortgage rates remaining elevated and average home prices hovering around $400,000, the company is monitoring mixed consumer dynamics, including the positive impact of tax refunds against headwinds from rising fuel costs and higher interest rates.
