Home Depot Q2 Earnings Call Highlights

MarketBeat

Tue, August 18, 2026 at 6:02 PM GMT+3 7 min read

HD +0.84%

Key Points

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Home Depot exceeded its expectations in Q2 fiscal 2026: Sales rose 5.7% to $47.9 billion, comparable sales increased 1.7%, and adjusted EPS grew 5.1% to $4.92. Demand was broad-based, with 13 of 16 merchandising departments posting positive comparable sales and professional customers outperforming DIY shoppers.
Digital and delivery investments gained traction: Online comparable sales climbed 11% for a fifth consecutive quarter of double-digit growth. Home Depot also expanded Express Delivery nationwide and reported improving same-day, next-day and big-and-bulky delivery performance.
The company reaffirmed its full-year outlook despite tariff-related margin benefits that are expected to be offset by higher fuel, energy and product costs. Management continues to cite housing affordability and low housing turnover as pressures on larger discretionary projects.

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Home Depot (NYSE:HD) reported second-quarter fiscal 2026 sales growth and comparable-sales gains that exceeded its expectations, as demand broadened across much of the business despite continued pressure on larger discretionary home-improvement projects.

Sales rose 5.7% from a year earlier to $47.9 billion, while total comparable sales increased 1.7% and U.S. comparable sales rose 1.3%. Adjusted diluted earnings per share increased 5.1% to $4.92, from $4.68 in the prior-year quarter. Reported diluted EPS was $4.79, compared with $4.58 a year earlier.

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Chief Financial Officer Richard McPhail said the results reflected broad-based demand and execution by the company's teams. He said the Northern and Western U.S. divisions posted positive comparable sales, while Canada and Mexico also recorded positive comps.

McPhail also addressed Ted's temporary medical leave of absence, announced the prior week, saying the company wished him a quick recovery and expected his return in a few months.

Broad Category Gains, Pro Outperformance

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Executive Vice President of Merchandising Billy Bastek said 13 of Home Depot's 16 merchandising departments posted positive comparable sales during the quarter. The positive departments included storage, electrical, hardware, power, plumbing, indoor garden, kitchen, paint, bath, outdoor garden, building materials, flooring and millwork.

The company's comparable average ticket increased 2.8%, while comparable transactions declined 1%. Big-ticket transactions of more than $1,000 rose 2.4%. Bastek said portable power and patio performed well, while larger discretionary projects remained under pressure.

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Professional customers posted positive comparable sales and outperformed do-it-yourself customers. Bastek cited pro-category strength in portable power, decking, dimensional lumber, pipe and fittings, fasteners, hand tools and concrete. DIY demand was strongest in spring-related categories including live goods, mulch, soils, hardscapes, storage, patio and grills.

During the analyst question-and-answer session, Bastek said the business's strength was concentrated beyond seasonal categories. Of the company's 20 top-performing classes of business, only three were seasonal, he said, pointing to demand in the "middle of the store," including electrical, plumbing, hardware and tools.

Digital, Delivery and Store Investments

Total company online comparable sales rose 11%, marking the fifth consecutive quarter of double-digit year-over-year online growth. Jordan Broggi, executive vice president of customer experience and president of online, said digital traffic and conversion both increased, while the mobile app was the company's fastest-growing digital surface.

Senior Executive Vice President Ann-Marie Campbell said Home Depot continues to invest in store operations, technology and on-shelf availability. The company said on-shelf availability remains at record levels.

Campbell highlighted the expansion of the company's Magic Apron tool, which associates and customers can use in stores to locate products and obtain project and product information. Broggi said customers are now submitting millions of questions per month through Magic Apron.

Home Depot also announced a nationwide rollout of Express Delivery for tens of thousands of products. Customers can pay a flat fee for delivery in three hours or less, with most deliveries currently arriving in less than one hour, according to Broggi.

More than 65% of deliveries for in-stock parcel products are now same-day or next-day.
About 55% of stocked big-and-bulky product deliveries are completed within two days.
U.S. lead times for big-and-bulky deliveries have fallen about 45% over the past 18 months.
Next-day appliance delivery on key SKUs now reaches nearly 60% of the population.

Campbell said the company is seeing a sales lift in markets where it has stocked select appliances for faster direct delivery. She also said 100% of stores qualified for the company's Success Sharing profit-sharing program for hourly associates based on first-half results.

Tariff Refunds and Margin Pressure

Second-quarter gross margin increased about 25 basis points year over year to 33.7%. McPhail said the result included $685 million of International Emergency Economic Powers Act, or IEEPA, tariff refunds that reduced cost of goods sold during the quarter.

The company received $730 million in tariff refunds near the end of June, McPhail said. Of that amount, $685 million applied to merchandise that had already been sold, while the remaining $45 million remained in inventory and is expected to flow through the income statement as inventory is sold.

McPhail said the refunds represented roughly a 145-basis-point benefit to quarterly gross margin, but were offset in part by approximately 60 basis points of unplanned costs related to fuel, energy and other product inputs. Acquisitions of GMS and Mingledorff's also created about 60 basis points of mix-related margin pressure.

The company expects the tariff refunds to be fully offset by unplanned cost pressures over the full year. McPhail said the timing of the refunds may create some shift between second- and third-quarter results, while fourth-quarter gross margin is expected to be roughly flat from the prior year.

Operating margin was 14.3%, down from 14.5% a year earlier. Adjusted operating margin was 14.7%, compared with 14.8% in the prior-year period. Home Depot opened three stores during the quarter, bringing its store count to 2,364.

Full-Year Outlook Reaffirmed

Home Depot reaffirmed its fiscal 2026 guidance despite the stronger-than-expected second quarter. The company expects comparable sales to range from flat to up 2%, while total sales are expected to grow approximately 2.5% to 4.5%, including contributions from the GMS acquisition, new stores, new branches and tuck-in acquisitions.

The company expects SRS to generate mid-single-digit organic sales growth for the full year and plans to open about 15 new stores and 40 to 50 new SRS branches. It forecasts gross margin of approximately 33.1%, operating margin of 12.4% to 12.6%, and adjusted operating margin of 12.8% to 13%.

McPhail said housing affordability and historically low housing turnover continue to weigh on demand for larger projects. Still, he said the company believes it is gaining market share through investments in stores, delivery, digital capabilities and professional-customer services.

About Home Depot (NYSE:HD)

The Home Depot, Inc (NYSE: HD) is a leading home improvement retailer that operates large-format stores and an integrated online platform offering a broad range of products and services for do-it-yourself consumers, professional contractors and businesses. The company was founded in 1978 by Bernard Marcus and Arthur Blank and is headquartered in Atlanta, Georgia. Since opening its first stores at the end of the 1970s, Home Depot has grown into a multinational retailer known for its orange-branded stores and wide assortment of home improvement merchandise.

Home Depot's core business includes the sale of building materials, lumber, tools, hardware, appliances, paint, plumbing and electrical supplies, lawn and garden products, and home décor.

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The article "Home Depot Q2 Earnings Call Highlights" was originally published by MarketBeat.

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