Home Depot Inc (HD US) Hold: Hard to fight the macro

Research evidence excerpt

Home Depot Inc (HD US) Hold: Hard to fight the macro

Equities ● Specialty Retail

19 May 2026

Guidance maintained, housing market still fragile

Net quarterly sales increased by 4.8% y-o-y to USD41.8bn, in line with HSBC and consensus

estimates, driven by a 0.6% SSS increase, with a 2.2% rise in average ticket but a 1.3% decline

in transactions. Management underlying demand was broadly similar to FY2026, but customers

were showing greater uncertainty and housing affordability pressure, which continued to weigh

on larger discretionary projects, postponing projects. The top line performance was largely

driven by continued resilience of Pro segment, which remains structurally stronger than DIY

demand amid a still challenging housing market.

Monthly sales performance in Q1 showed a clear swing across the quarter. Comps were +0.7%

in February, accelerated to +2.0% in March, and then turned -0.5% in April. The same pattern

held in the US, where comps were +0.4% in February, +2.0% in March, and -0.8% in April,

ending the quarter at +0.6% total company comps and +0.4% US comps overall. Management

attributed the stronger February–March performance largely to good customer engagement in

spring-related projects where weather was favourable (notably in the West early in the quarter

and the South in March), while the April softness was linked to a less favourable weather

pattern in the last two weeks of April versus last year.

Gross margin was down 80bp y-o-y to 33.0% primarily reflecting a change in mix as a result of

the GMS acquisition, and price investments at SRS. Inventories increased to USD27.2bn at the

end of 1QFY26, up from USD25.7bn in the prior year. The increase was primarily driven by the

inclusion of GMS in the balance sheet following the acquisition