Home Depot, Inc. (NASDAQ:HD) reported fourth-quarter financial results on Tuesday. The transcript from the company’s earnings call has been provided below.
- Home Depot stock is moving in positive territory. Why is HD stock advancing?
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
Operator
With plenty of styles to choose from, it’s easy to find fixtures that fit your home and your budget. Save up to 40% on select vanity lighting online and find the perfect fit for your home. Shop in store, in the lighting aisle or online at Home Depot. How Doers Get More Done Start the new year by tackling a project you’ve been thinking about. The Home Depot’s free How to workshops make it easy. Learn step by step from our knowledgeable associates live or on demand so you can install a vanity, replace a bathroom fan, or swap out shower hardware. Thinking outdoors, Learn to plant and care for trees, prep your lawn for spring, and so much more. Follow along live to ask questions or watch at your own pace. Either way, we’ll walk you through each step and share tips that make the work simpler. Whether this is your first DIY or your latest project, now’s the time to try something new. Find a class that fits your project at homedepot.com Workshops. Oh, forget something for your project? We’ve got you Greetings and welcome to the Home Depot fourth quarter 2025 earnings conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Isabelle Janci. Please go ahead.
Isabel Janci (VP Investor Relations)
Thank you, Christine and good morning everyone. Welcome to Home Depot’s fourth quarter and fiscal year 2025 earnings call. Joining us on our call today are Ted Decker, Chair, President, President and CEO Ann Marie Campbell, Senior Executive Vice President Billy Bastic, Executive Vice President of merchandising and Richard McVail, executive vice president and Chief Financial Officer. Following our prepared remarks, the call will be open for questions. Questions will be limited to analysts and investors and as a reminder, please limit yourself to one question with one follow up. If we are unable to get to your question during the call, please call our Investor relations department at 770-384-2387. Before I turn the call over to Ted, let me remind you that today’s press release and the presentations made by our executives include forward looking statements under the federal securities laws, including as defined in the Private Securities Litigation Reform act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the release. In our most recent annual report on Form 10K and in our other filings with the securities and Exchange Commission. Today’s presentation will also include certain non GAAP measures, including but not limited to adjusted operating margin, adjusted diluted earnings per share, and return on invested capital. For a reconciliation of these and other non GAAP measures to the corresponding GAAP measures, please refer to our earnings press release and our website now. Let me turn the call over to Ted.
Ted Decker (Chair, President, and CEO)
Thank you, Isabelle and good morning everyone. Sales for fiscal 2025 were $164.7 billion, an increase of 3.2% from the same period last year. Comp sales increased 0.3% from the same period last year and comps in the U.S. increased 0.5%. Adjusted diluted earnings per share were $14.69 compared to $15.24 in the prior period. In the fourth quarter, comp sales increased 0.4% from last year and comps in the U.S. were up 0.3%. Adjusted diluted earnings per share were $2.72 compared to $3.13 in the prior year. In the quarter, our regional performance varied with our northern and western division posting positive comps in local currency. Mexico reported positive comps and Canada reported negative comps. Our fourth quarter results were largely in line with our expectations, reflecting the lack of storm activity in the third quarter and ongoing consumer uncertainty and pressure in housing. Additionally, storm activity in January provided a sales benefit in the quarter. Adjusting for storms, underlying demand was relatively stable throughout the year. As you’ll hear from Billy, we are growing market share by delivering the best value proposition in home improvement. As we shared with you at our Investor and Analyst conference in December, we are uniquely positioned to grow share of wallet with all our customers. We are investing across the business to drive our core and culture, deliver a frictionless interconnected experience and win the pro. As Ann will detail, our teams did an incredible job staying engaged, focusing on the customer and elevating the customer experience. In fact, our customers are telling us that our associates continue to deliver exceptional service. In addition, our merchants continue to offer tremendous value as evidenced by record setting events in the quarter. We’re also encouraged by the traction we see with the pro. Pros who are utilizing our pro ecosystem of capabilities are spending more with us and we remain focused on enhancing our capabilities from sales support to project management to delivery, all to better support pros throughout the life of their projects. This year, SRS grew organic sales by a low single digit percentage and expanded market share despite pressured industry demand and lack of storms in the back half of the year. This is a testament to their strong value proposition, customer relationships and consistent execution. In addition to the GMS acquisition, they completed several tuck in acquisitions and opened a number of greenfield locations across their verticals. Going forward, we will continue to support SRS’s momentum and we expect their organic sales to grow mid September single
digits in fiscal 2026. Looking ahead to fiscal 2026, we expect total sales growth of approximately 2.5% to 4.5%, comparable sales growth of approximately flat to 2% and adjusted diluted earnings per share to grow Approximately flat to 4%. We remain focused on delivering the best customer experience and and value proposition and home improvement. We have a clear growth strategy and we’re investing in our stores, in our interconnected shopping experience and in the Pro to grow share in any market environment. I want to close by thanking our associates for their hard work and dedication to serving our customers in a dynamic year. With that, let me turn the call over to Anne.
Ann Marie Campbell (Senior Executive Vice President)
Thanks Ted and good morning everyone. First, I want to thank our syncios who did a great job serving our customers during the recent winter storm Fern that impacted many of our communities we serve, particularly in our Northern and Southern division. Our priority in situations like these is always the safety of our associates and customers. We activated our emergency response protocols working with our vendors and merchants teams to deliver essential products to the appropriate stores. This ensured we remained in stock and ready to serve our communities before, during and after the storm. As always, I’m extremely proud of how our team showed up for each other and our customers, and that commitment continues to be a defining part of who we are as a company. As you heard from us in December, we are focused on the core and culture of our company. Our associates are the key to delivering an exceptional customer experience. Their passion, knowledge and expertise are critical to solving customers problems and fulfilling their dreams. Over the last year, we have talked about how we have enabled tools and processes for our associates to better serve our customers. These changes not only increase associate engagement, but also enhances store performance by driving higher sales productivity and efficiency in our operations. We’re also improving the customer experience by transitioning tasking to our med team. Our med Team’s core competency is servicing our base and extra executing merchandising changes in our stores by transitioning task into them. Our Orange Apron associates have more time to engage with customers and drive sales. And while this transition is not complete in our pilot stores, we have already seen a meaningful increase in labor productivity over the years. Our business has evolved to meet the needs of our interconnected and Pro Customers as you know, over 50% of our online orders are fulfilled through our stores. Ensuring that our orders are picked, staged and delivered in a reliable and repeatable fashion is critical to providing a frictionless customer experience regardless of the type of fulfillment, whether picked up in store or delivered the same day to a home or job site. As a result, we have realigned certain positions in our stores to better drive the outcomes we desire. We now have an Operations Experience Manager who is responsible for managing customer service more broadly, including driving uniform operational processes to enhance the interconnected and fulfillment experiences and for pros. Our dedicated, unified Pro team, including a Pro Customer Experience Manager, continues to elevate the pro experience in our stores by assisting pros and serving as a main point of contact, ensuring a superior and cohesive shopping and fulfillment experience for customers inside and outside of our stores. As a result, we’ve seen increased engagement, higher pro sales, and continued growth in our Pro Extra loyalty program. We’re excited about all of the progress we have made in our stores this year. Our efforts are paying off this year. Our customer satisfaction score increased every quarter and our tenure with Hourly Associates is the highest it’s been since 2017. Our associates continue to go above and beyond serve our customers despite a challenging environment and I’d like to close by thanking them for all that they do. We are relentlessly focused on delivering the best customer experience in home improvement and we know that our efforts are positioning us well to grow share in the market. With that, let me turn the call over to Billy.
Billy Bastick (Executive Vice President of Merchandising)
Thank you Ann and good morning everyone. I want to start by also thanking all of our associates, supplier and supply chain partners for their ongoing commitment to serving our customers and communities. As you heard from Ted, our performance during the fourth quarter was largely in line with expectations with underlying demand in the quarter similar to what we’ve seen throughout the year. Turning to our merchandising department comp performance for the fourth quarter, 8 of our 16 merchandising departments posted positive comps, including power, electrical, storage, indoor garden, hardware, plumbing, bath and kitchen. During the fourth quarter, our comp average ticket increased 2.4% and comp transactions decreased 1.6%. The growth in comp average ticket primarily reflects some price increases, a greater mix of higher ticket items and customers continuing to trade up for new and innovative products. Big ticket comp transactions for those over $1,000 were positive 1.3% compared to the fourth quarter of last year. We were pleased with the performance we saw in categories such as power, plumbing and electrical. However, larger discretionary projects remain under pressure. During the fourth quarter, Pro posted positive comps and outperformed diy. We saw strength across Pro heavy categories like gypsum, wire, concrete and plumbing. In diy, we saw strength across our Gift center events, hand tools, storage, portable power and hardscapes. Turning to total company online comp sales sales leveraging our digital platforms increased approximately 11% compared to the fourth quarter of last year. We’re excited about the continued success we are seeing across our interconnected platforms. This quarter we continued to enhance delivery reliability in communication with the rollout of real time delivery tracking for big and bulky deliveries across all categories. This enhancement gives our customers greater visibility and certainty on the timing of their delivery. We know that as we remove friction from the experience, we see incremental customer engagement leading to greater sales across all points of interaction. During the fourth quarter we hosted our appliance, Gift center and Black Friday events. We saw strong engagement across all of these events with our Gift center and Black Friday events posting record sales years. We are looking forward to the year ahead, particularly with the spring selling season right around the corner and we have a great lineup of innovative products that provide our customers with tremendous value, from outdoor living products including patio and grills to our lineup of outdoor power equipment. Whether it’s our Ryobi 40 volt lawnmower with a brushless motor and lithium ion batteries which deliver more power and longer run times, or a Milwaukee 18 volt string trimmer kit designed to meet the needs of the landscape professional. And our Spring Gift center event continues to lean into cordless technology with a wide assortment of products from Ryobi, Milwaukee, Makita and DeWalt, many of which are exclusive to the Home Depot in the Big Box retail channel. We’re also excited about our Live Goods program. Every year our merchants partner with our national and regional growers to provide our customers with new and improved varieties to enhance the overall garden experience. Investing in our relationships with our growers allows us to continue to drive innovation and value to meet the needs of our customers and improves their shopping experience while building loyalty to the Home Depot. We remain focused on delivering the best brands, assortments and value to our customers. With that, I’d like to turn the call over to Richard.
Richard McPhail (Executive Vice President and Chief Financial Officer)
Thank you Billy and good morning everyone. Before I comment on our results, I would like to remind everyone that fiscal 2025 consisted of 52 weeks, while fiscal 2024 consisted of 53 weeks. The extra week added approximately $2.5 billion in sales to the fourth quarter of fiscal 2024 when we report our comparable sales for comps, we report them on a 52 week to 52 week basis by comparing weeks one through 52 of fiscal 2025 with weeks two through 53 of fiscal 2024. In the fourth quarter of 2025, total sales were $38.2 billion, a decrease of $1.5 billion were approximately 3.8% from last year. During the fourth quarter, our total company comps were positive 0.4% with comps of negative 0.2% in November, positive 0.1% in December, and positive 1.3% in January. Comps in the U.S. were positive 0.3% for the quarter with comps of negative 0.3% in November, negative 0.2% in December, and positive1.4% in January. For the year, our sales totaled $164.7 billion, an increase of $5.2 billion or 3.2% versus fiscal 2024. For the year, total company comp sales increased 0.3% and U.S. comp sales increased 0.5% in the fourth quarter. Our gross margin was approximately 32.6%, a decrease of approximately 20 basis points from the fourth quarter last year, primarily reflecting a change in mix as a result of the GMS acquisition which was in line with our expectations for the year. Our gross margin was approximately 33.3%, a decrease of 10 basis points from last year, which was in line with our expectations. During the fourth quarter, operating expense as a percent of sales increased approximately 105 basis points to 22.6% compared to the fourth quarter of 2024. Our operating expense performance reflects natural deleverage …