Home Depot's just okay quarter

Consumers aren’t going big, they’re just going home.

Home Depot reported Q1 earnings this morning, and even though the home improvement giant beat top and bottom line expectations, the mixed bag of results also showed that consumers are growing more cautious.

• Adjusted EPS came in at $3.43, slightly higher than the $3.41 analysts forecast.
• Comparable store sales rose only 0.6%, below expectations of 0.8%—illustrating that, although consumers are still spending, growth is muted.
• Full-year sales are forecast to rise between 2.5% and 4.5%, compared to the 4% analysts expected.

A range of factors contributed to the underwhelming quarter. The housing market is still in a rut, with elevated mortgage rates and home prices discouraging people from moving and taking on major renovations. On top of that, inflation is reaccelerating, causing consumers to pull back discretionary spending in general.

“The underlying demand in our business was relatively similar to what we saw throughout fiscal 2025, despite greater consumer uncertainty and housing affordability pressure,” said Home Depot CEO Ted Decker in a statement.

In short: Even though the numbers looked just fine on the surface, investors were hoping for signs of strength from Home Depot, not just more of the same. While shares sank into the red this morning, they ended the day up 0.89%. This year so far, shares of the retailer have fallen 12.1%.

The united state of the consumer

Home Depot is often viewed as a bellwether for how American consumers are feeling—and the answer this quarter was, “Meh.”

The latest macro data paints an even less encouraging picture: US consumer sentiment fell to a record low earlier this month. The culprit, of course, is rising inflation, along with economic anxiety stemming from the Iran war. Speaking of, rising oil prices have pushed the cost of groceries 3% to 4% higher, according to UBS. TLDR: The vibes are off, and people can feel it.

This week we get a few more heavy-hitting earnings reports from other big box retailers that have a pulse on how people are feeling about the economy, including Target tomorrow and Walmart on Thursday. Some analysts predict that with all this economic angst, value retailers like Target, Walmart, and Ross Stores will enjoy a boost.

But for now, the only renovations Wall Street will be doing is on expectations.—LB