01—Abstract
Summary
Summary of the 10-Q filed May 27, 2026. Cited figures are marked; the original filing is the authoritative source.
The Home Depot, Inc. (HD) reported its first quarter fiscal year 2026 results, showcasing a 4.8% increase in net sales to $41.8 billiona, driven by the inclusion of GMS acquisition and positive comparable sales.
Despite a slight decrease in gross profit margin to 33.0% from 33.8% year-over-year, the company maintained a strong operating income of $4.98 billionb. Diluted earnings per share saw a modest decline to $3.30 from $3.45, primarily due to lower net earnings. The company generated a robust $6.0 billion in cash flow from operations, supporting significant dividend payments of $2.3 billion and capital expenditures of $844 million, with plans for approximately $4 billion in capital expenditures for the full fiscal year.
Management highlighted the ongoing integration of the GMS acquisition and a pause in share repurchases as the company focuses on debt reduction. While inventory turnover slightly decreased, the company emphasized its disciplined capital allocation strategy, prioritizing business investments, followed by dividends, and then share repurchases. The company's outlook remains focused on strategic initiatives like store development and enhancing customer experience, while continuing to monitor macroeconomic factors and trade policy developments.
02—Key points
Key Highlights
- Net sales increased by 4.8% to $41.8 billion in Q1 FY2026, aided by the GMS acquisition and comparable sales growth.
- Gross profit margin slightly decreased to 33.0% from 33.8% in the prior year, largely due to the GMS acquisition.
- Operating income remained strong at $4.98 billion, though slightly down from $5.13 billion in Q1 FY2025.
- Diluted earnings per share decreased by 4.3% to $3.30 compared to $3.45 in the prior year.
- Generated robust cash flow from operations of $6.0 billion, a significant increase from $4.3 billion in Q1 FY2025.
- The company has paused share repurchases and is prioritizing debt reduction, with $11.7 billion remaining under its authorization.
- Plans to invest approximately $4 billion in capital expenditures for fiscal year 2026 to support strategic initiatives.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2027, Home Depot, Inc. kept $0.08.
- Revenue$41.77B100.0%
- Cost of revenue−$27.98B67.0%
- Gross profit$13.78B33.0%
- Operating costs−$8.80B21.1%
- Operating income$4.98B11.9%
- Interest, other & tax−$1.69B4.1%
- Net income$3.29B7.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2027filed May 27, 2026Financial Statements
Q1 FY2027 against Q1 FY2026
| Line item | Q1 FY2027Q1 FY2026 | Change |
|---|---|---|
| Revenue | $41.77B$39.86B | +4.8% |
| Cost of Revenue | $27.98B$26.40B | +6.0% |
| Gross Profit | $13.78B$13.46B | +2.4% |
| SG&A Expenses | $7.96B$7.53B | +5.7% |
| Operating Expenses | $8.80B$8.33B | +5.7% |
| Operating Income | $4.98B$5.13B | −3.0% |
| Net Income | $3.29B$3.43B | −4.2% |
| EPS (Basic) | $3.31$3.46 | −4.3% |
| EPS (Diluted) | $3.30$3.45 | −4.3% |
| Shares Outstanding (Basic) | 994.00M992.00M | +0.2% |
| Shares Outstanding (Diluted) | 996.00M994.00M | +0.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of the sales increase in Q1 FY2026?
The primary drivers for the 4.8% increase in net sales to $41.8 billion were the inclusion of sales from the GMS acquisition, which contributed $1.3 billion, and positive comparable sales growth of 0.6%. A weaker U.S. dollar also positively impacted net sales by $220 million.
Why did the gross profit margin decrease in Q1 FY2026?
The gross profit margin decreased to 33.0% from 33.8% in the prior year. Management attributes this primarily to the inclusion of GMS in the consolidated results, which had a dilutive effect on the overall margin.
What is the company's stance on share repurchases and debt management?
The company paused share repurchases in March 2024 in connection with the SRS acquisition and has not resumed them. The focus in fiscal 2026 is on reducing outstanding debt. Approximately $11.7 billion remains available under its $15.0 billion share repurchase authorization.
How is the company planning to use its capital in fiscal year 2026?
The company plans to invest approximately $4 billion in capital expenditures for fiscal year 2026, in line with its strategy to drive core business, build new stores, maintain existing ones, deliver a frictionless interconnected experience, and win with Pros. Additionally, it paid $2.3 billion in cash dividends in the first quarter and intends to continue paying dividends, subject to Board declaration.
06—Continue