Key takeaways:
- Home Depot reported Q1 2026 sales of $41.8 billion, up 4.8% year-over-year.
- Despite high gas prices, tariffs, and economic uncertainty, core home improvement consumers remained resilient.
- Customer transactions decreased 1.3% as shoppers paused large discretionary projects and focused on smaller, essential home maintenance tasks.
- Nine out of sixteen product categories saw positive comparable sales; strength was notable in storage, power, plumbing, paint and kitchens.
- Home Depot plans to open approximately 15 new retail stores and between 40 and 50 new SRS locations.
Despite high gas prices, new tariffs and housing uncertainty, Home Depot’s core home improvement consumer remains resilient, according to executives on the company’s Q1 earnings call on Tuesday.
“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 President and CEO Ted Decker on the call. “Our customer seems to be in reasonably good shape.”
Home Depot reported $41.8 billion in Q1 2026 sales, a 4.8% increase from 2025. The company’s first quarter ended on May 3, 2026.
While Home Depot posted solid revenue growth and positive comparable sales, executives acknowledged the shifting behavior of their core customers. Shoppers are increasingly pausing on large-scale projects in favor of smaller, essential home maintenance tasks, said EVP of Merchandising Billy Bastek.
“In the first quarter, nine of our 16 merchandising departments posted positive comps, including storage, power, hardware, plumbing, electrical, bath, indoor garden, paint and kitchens,” Bastek said.
Comparable average ticket increased 2.2% and comparable transactions decreased 1.3%, Bastek said. Big-ticket comparable transactions for those over $1,000 increased 0.8% year-over-year.
“However, larger discretionary projects remain under pressure,” Bastek said. Shoppers are taking on smaller tasks and essential repairs, but high interest rates and broader uncertainty are causing them to defer massive remodels.
High Gas Prices Weigh on Home Depot’s Net Income
Chief Financial Officer Richard McPhail said high gas prices due to the war in Iran are impacting Home Depot’s profit and loss statement. Net income for the quarter was $3.3 billion, a 4.2% year-over-year decline.
“Yes, we see increased fuel costs not only hitting us directly, obviously, we’re obviously have a considerable amount of transportation expense in our P and L but also in the form of input costs at the same time,” McPhail said during the earnings call.
Bastek said it’s more difficult to measure how gas prices are impacting Home Depot’s consumers.
“If you look across history and you look at significant fuel price increases and their impact on demand, it’s hard to parse out fuel increases from a general degree of pressure on consumer spending,” he said. “It also has to be taken in the context of the interest rate environment, which we are more highly sensitive to.”
In addition to fuel pressures, the company is monitoring the potential impact of changing trade regulations and expects to see some degree of relief from tariff refunds.
“There are some potential tailwinds here,” McPhail said. “We’ve talked in our sector about tariff refunds. We have filed for those tariff refunds. While we don’t disclose the amount, and while we have received an immaterial amount to date, we have assumed that that could provide a significant offset to those costs.”
Home Depot’s Q1 Results
Comparable sales increased 0.6% in Q1 year-over-year, while comparable sales in the U.S. saw a 0.4% increase.
The company’s gross margin for the first quarter was 33.0%, a decrease of approximately 75 basis points from the first quarter of 2025. According to executives, this decrease primarily reflects a change in mix resulting from recent corporate acquisitions, including the purchase of SRS Distribution and HVAC distributor Mingledorff’s. Operating margin for the quarter was 11.9%, with an adjusted operating margin of 12.3%.
The professional contractor (Pro) segment continued to be a major growth engine for the retailer. Pro sales outperformed do-it-yourself (DIY) sales during the quarter. Bastek noted that Home Depot saw strength across many Pro-heavy categories, including power equipment, pipe and fittings, water heaters, fasteners and paint.
On the DIY side, spring weather drove engagement in seasonal projects. The company reported strong performance in live goods, outdoor power equipment, patio furniture, grills and storage solutions. Sales leveraging digital platforms also increased over 10% compared to the first quarter of 2025, marking the fourth consecutive quarter of double-digit year-over-year growth for online comp sales.
Home Depot Ecommerce Improvements
Home Depot continues to transform its digital commerce operations, blending innovation with customer-centric upgrades across online and in-store channels, according to Ann-Marie Campbell, Senior EVP.
Home Depot’s investments in technology, faster fulfillment, and enhanced online tools have already driven sustained digital sales growth, Campbell said. Ecommerce upgrades include focusing on a unified shopping experience that makes things easier for customers online and in stores, such as improved mobile options, real-time inventory tracking, flexible delivery and expanded click-and-collect.
“We’re committed to making shopping with Home Depot effortless and accessible, no matter how our customers choose to engage.”
Home Depot’s Financial Outlook
Looking ahead, Home Depot reaffirmed its fiscal 2026 guidance, projecting total sales growth of between 2.5% and 4.5%. This projection includes the contributions from the SRS acquisition, new store openings and other strategic additions. Comparable sales are expected to range between flat and 2% growth.
The company anticipates a gross margin of approximately 33.1% for the year, with an operating margin falling between 12.4% and 12.6%. Adjusted diluted earnings per share are projected to grow between flat and 4.0% compared to fiscal 2025. Capital expenditures are forecasted to be approximately 2.5% of total sales.
