The Home Depot reported earnings this morning and delivered an expected quarter. They continue to deal with low housing turnover and a stretched consumer, but are managing to post positive comps.

They saw comp sales increase by 0.5% in the quarter and think they’ll have 0% to 2% comp growth in 2026. They’re growing comp sales through average ticket price.

During the fourth quarter, our comp average ticket increased 2.4 percent, and comp transactions decreased 1.6 percent. 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.

Billy Bastek, EVP Merchandising at The Home Depot

That’s a bit of a mixed bag. An increase in comparable sales is good overall, but you’d like it to be more in the number of transactions. You can’t tease the blend out, but hopefully it’s less in pricing activity and more from higher ticket items and the purchase of innovation.

Home Depot continues to see resilience in purchases over $1,000. That’s consistent with the idea that the economy is impacting middle and lower income families more than higher income families. We heard that from Clorox and other companies.

Yeah, we were pleased with our big-ticket comp transactions. As I mentioned, transactions over $1,000,
up 1.3% for the quarter that’s now multiple quarters where we’ve seen positive impact.

Billy Bastek, EVP Merchandising at The Home Depot

Despite consumer pressures, Home Depot hasn’t seen much trade down. They did mention though seeing some in countertops and appliances, which could be an indicator that translates to outdoor kitchens and grills.

We haven’t seen a lot of trade down, but we’ve seen some as we’ve talked about countertops and things of
those nature. We saw a little bit in our appliance business as well, but haven’t seen that more broadly, but
just very consistent across every single quarter. Outside of the dynamics we’ve talked about, whether those are storms or other things, we continue to see strong customer engagement. Don’t really see a decline or trade down, if you will, from what customers are engaging in. And as I mentioned, we had a record Q4 across our events. So where we’ve continued to create great value for customers, we’re seeing just great interaction across the board.

Billy Bastek, EVP Merchandising at The Home Depot

It sounds like the environment that they’ve been operating in recently they expect to continue. That’s not very promising for the upcoming grill season.

As we shared at our Investor and Analyst conference in December, there are a number of dynamics we are observing that are pressuring housing and home improvement demand. The current mortgage rate
environment and significant increase in home prices since 2019 have impacted housing affordability. Housing turnover has remained at historical lows since 2023, which has significantly reduced demand for projects and other purchases associated with buying and selling a home. Our customers also tell us, they have concerns over general economic uncertainty, including inflation, growing job concerns, and higher financing costs.

As we look ahead to fiscal 2026, we anticipate these pressures will persist as we have not yet seen a catalyst for an inflection in housing activity.

Richard McPhail, EVP and CFO at The Home Depot

If there is one bright trend in there business that continues to run strong quarter after quarter, it’s digital sales. That trend continued through Q4.

Turning to total company online comp sales, sales leveraging our digital platforms increased approximately 11 percent 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 and 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.

Billy Bastek, EVP Merchandising at The Home Depot

One macro dynamic that The Home Depot views differently than Tractor Supply is the impact of tax refunds this year. Tractor Supply had a positive view of how much consumers will receive where Home Depot is more pessimistic in terms of the amount and how they’ll be spent. Traditionally, large discretionary purchases like grills are aided by large one-time payments to consumers like tax refunds.

Tax stimulus you mentioned, we’re actually not counting on a lot of support from tax stimulus. We’ve
seen very large ranges of what will show up in household pocketbooks. And we’ve seen as low as $70
billion and as high as $200 billion in terms of refunds and adjusted rates for 2026. If you take a midpoint
of that $135 billion-odd and you look at our share, Home Depot’s share of PCE, which is about 60 basis
points, you would get at the midpoint, maybe 0.5-basis point of comp support at that high-level analysis of tax relief. But we’re hearing that it’s just as likely that that’s either going to be used for debt pay-down, for lower income deciles or saved by higher income deciles. So, we’re not planning on a lot. We’ve thrilled to get some tax stimulus benefit, but we’re not planning on a lot of it. And then tariffs, I mean, this news is breaking by the moment.

Ted Decker, President and CEO at The Home Depot