Home Depot Earnings Live: Comps Drop and Tariffs In View

Tariffs are back in the spotlight, and Home Depot is preparing for real cost pressure. Management acknowledged that goods from countries subject to 10%–30% tariffs make up a material chunk of their sourcing—but they reiterated their commitment to hold pricing steady. EVP Billy Bastek made it plain: “We don’t see broad-based price increases for our customers.”

That’s good for consumers, but it tightens Home Depot’s margin runway. To offset this, the company is pruning unviable SKUs, shifting sourcing (over 50% of goods are now U.S.-made), and using line-by-line profitability models. Still, some margin compression is inevitable, especially as Home Depot absorbs costs that smaller competitors might pass on.

Long-term, this pricing discipline helps Home Depot win share—but only if productivity, sourcing, and SKU efficiency keep pace. It also suggests a bigger premium on scale and vertical integration, especially as tariff volatility ramps up in 2025–26.

One of the clearest pressure points for Home Depot this quarter: big-ticket discretionary remodeling is still stalled. CEO Ted Decker noted that while “customers are painting again and working in their yards,” higher interest rates are delaying larger renovations like kitchens and bathrooms. These big projects typically require financing, and Decker was frank: “We’ve yet to see that large project.”

This signals that until mortgage rates ease meaningfully or economic confidence rebounds, Home Depot’s most lucrative Pro-heavy categories may underperform. The company estimates there’s a $50 billion shortfall in cumulative home improvement spend—untapped demand sitting on the sidelines. Long-term, that represents a huge tailwind, but the release valve likely won’t open without rate relief or a clear catalyst.

In the meantime, Home Depot is leaning on smaller project engagement, targeted assortments, and better Pro credit access to stay competitive in the gap between homeowner intent and homeowner action.

1. Tariffs are real, but Home Depot is absorbing the blow — not passing it to consumers.

“We intend to generally maintain pricing across our portfolio… We don’t see broad-based price increases for our customers at all going forward.” – Billy Bastek, EVP Merchandising

Management emphasized they have no plans for sweeping price hikes—even if tariffs increase product costs—because protecting customer value is central to their long-term strategy. Instead, they’re relying on internal efficiencies and sourcing flexibility to defend gross margins.

2. Diversification is the firewall. No single country (outside U.S.) will dominate supply chain.

“More than 50% of our purchases are sourced in the U.S. … 12 months from now, no single country outside of the United States will represent more than 10% of our purchases.” – Ted Decker, CEO

That shift sharply limits exposure to any one country’s tariff risk (like China), reducing volatility across thousands of SKUs.

3. Margins will be protected through portfolio management and product mix control.

“There’ll be some things that don’t make sense that just end up going away.” – Billy Bastek

If tariffs make certain SKUs unprofitable, Home Depot is prepared to eliminate or re-spec those products rather than pass on costs. They’re using detailed product-line analysis to refine assortments in real time, favoring items that offer both value and resilience to tariff headwinds.

Earnings call is underway and here are several fresh takeaways from management:

• Supply‑chain resilience: >50% of purchases are now U.S.‑sourced, and within 12 months no single non‑U.S. country will exceed 10% of total buys.

• Generative‑AI in stores: The “Magic Apron” tool is driving higher online conversion by answering live DIY/pro questions with Home Depot’s proprietary expertise.

• Pro ecosystem momentum: SRS‑run trade‑credit program is onboarding pros faster than expected, helping Home Depot win larger commercial projects.

• Associate focus pays off: New in‑app Pocket Guide tutorials, certification programs and AI assistants have lifted Voice‑of‑Associate scores, boosting retention.

• Inflation boost: Lumber and copper price inflation added ~30 bps to average ticket, partially offsetting weakness in big‑ticket remodel categories.

In its forward‑looking statements, Home Depot cites the impact of tariffs, trade‑policy changes or restrictions, and international trade disputes as key risk factors and underscores ongoing efforts to diversify its supply chain to mitigate these threats. It further notes that such disruptions—including tariffs—could impair its business, supply chain and technology infrastructure .

More color around tariffs and how it is impacting business will likely come during the conference call.