01—Abstract
Summary
Summary of the 10-Q filed May 28, 2025. Cited figures are marked; the original filing is the authoritative source.
The Home Depot, Inc. reported a 9.4% increase in net sales to $39.9 billiona for the first quarter of fiscal 2025, largely driven by the inclusion of SRS, acquired in the prior year, which contributed $2.6 billion.
However, comparable sales saw a slight decline of 0.3%, indicating pressure on existing store performance due to macroeconomic uncertainties and a high interest rate environment. Net earnings decreased by 4.7% to $3.4 billionb, with diluted earnings per share falling to $3.45 from $3.63 in the prior year period, primarily due to lower overall net earnings and increased interest expenses. The company continued its capital allocation strategy by increasing its quarterly cash dividend and investing significantly in capital expenditures, while share repurchases remain paused.
Despite the top-line growth driven by acquisition, the comparable sales dip and lower net earnings warrant investor attention. The company's strategic focus on Pro customer capabilities and technology investments aims to bolster future performance. Management highlights efforts in supply chain diversification to mitigate tariff impacts.
While liquidity appears strong, the decrease in Return on Invested Capital (ROIC) from 37.1%c to 31.3% is notable, attributed to the financing of the SRS acquisition. Investors should monitor the company's ability to drive organic growth in comparable sales and manage its cost structure amidst a challenging economic backdrop.
02—Key points
Key Highlights
- Net sales increased by 9.4% to $39.9 billion, primarily due to the acquisition of SRS.
- Comparable sales decreased by 0.3%, reflecting a challenging macroeconomic environment and high interest rates impacting demand.
- Net earnings decreased by 4.7% to $3.4 billion, with diluted EPS falling to $3.45.
- The company increased its quarterly cash dividend by 2.2% to $2.30 per share.
- Capital expenditures for the quarter were $806 million, with plans to invest approximately $4 billion for the full fiscal year.
- Return on Invested Capital (ROIC) declined to 31.3% from 37.1% in the prior year, largely due to increased debt and equity from the SRS acquisition.
- Share repurchases remain paused since March 2024, with approximately $11.7 billion remaining under the current authorization.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Home Depot, Inc. kept $0.09.
- Revenue$39.86B100.0%
- Cost of revenue−$26.40B66.2%
- Gross profit$13.46B33.8%
- Operating costs−$8.33B20.9%
- Operating income$5.13B12.9%
- Interest, other & tax−$1.70B4.3%
- Net income$3.43B8.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 28, 2025Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $39.86B$36.42B | +9.4% |
| Cost of Revenue | $26.40B$23.98B | +10.1% |
| Gross Profit | $13.46B$12.43B | +8.3% |
| SG&A Expenses | $7.53B$6.67B | +12.9% |
| Operating Expenses | $8.33B$7.35B | +13.2% |
| Operating Income | $5.13B$5.08B | +1.1% |
| Net Income | $3.43B$3.60B | −4.6% |
| EPS (Basic) | $3.46$3.64 | −4.9% |
| EPS (Diluted) | $3.45$3.63 | −5.0% |
| Shares Outstanding (Basic) | 992.00M989.00M | +0.3% |
| Shares Outstanding (Diluted) | 994.00M992.00M | +0.2% |
05—Questions
Frequently Asked Questions
What is the primary driver of the net sales increase in Q1 FY2025?
The primary driver of the 9.4% net sales increase to $39.9 billion was the inclusion of SRS, a specialty trade distribution company acquired in the second quarter of fiscal 2024. SRS contributed $2.6 billion in net sales during the first quarter of fiscal 2025.
Why did comparable sales decrease despite the overall net sales increase?
Comparable sales, which measure the performance of existing stores and websites, decreased by 0.3%. This decline is attributed to macroeconomic uncertainties, a high interest rate environment that is pressuring home improvement demand, and a 0.5% decrease in comparable customer transactions. Foreign exchange rates also had a negative impact.
What is the company's outlook on capital allocation, particularly regarding dividends and share repurchases?
The company continues to prioritize investing in the business, followed by paying dividends. In February 2025, they announced a 2.2% increase in their quarterly cash dividend to $2.30 per share. Share repurchases have been paused since March 2024 in connection with the SRS acquisition, and the company does not have plans to resume them in fiscal 2025, although a substantial authorization remains.
How is the SRS acquisition impacting the company's financial performance beyond top-line sales?
While SRS boosted net sales, its inclusion has impacted profitability metrics. The gross profit margin decreased slightly due to the inclusion of SRS, and depreciation and amortization expenses increased due to higher intangible asset amortization related to SRS. Furthermore, the SRS acquisition, financed through debt and equity, has led to a decrease in the company's Return on Invested Capital (ROIC).
06—Continue