By Savyata Mishra, Nicholas P. Brown
(Reuters) -Home Depot said on Tuesday it will keep prices unchanged despite U.S. tariffs, after strong demand from professional contractors helped the home-improvement chain beat first-quarter sales estimates and maintain its annual forecast.
Citing a diversified supply chain and varied product lines, Billy Bastek, Home Depot (NYSE: HD )’s executive vice president of merchandising, told analysts on a conference call that the company intends "to maintain pricing across our portfolio."
But that means some products could disappear from shelves.
"There’s items that we have that could potentially be impacted from a tariff that, candidly, we won’t have going forward if it doesn’t make sense inside the line structure," Bastek said.
Home Depot expects that in the next 12 months, no single country outside the U.S. will represent more than 10% of its purchases, CEO Ted Decker said on the call.
The company’s commitment to avoid price hikes could help Home Depot increase market share, analysts said. "We expect widening price gaps vs. smaller competitors ahead," Jefferies analyst Jonathan Matuszewski said in a note on Tuesday.
The strategy stands in contrast to Walmart (NYSE: WMT )’s warning last week that shoppers could soon face higher prices due to tariffs.
Walmart’s approach drew the ire of President Donald Trump, who said the retail giant should "eat the tariffs" on imported goods instead of passing on the costs to consumers.
Home Depot sources less than half of its goods outside North America, and has cut its exposure to China in recent years.
Recent slowness in home improvement retail - a market often viewed as a bellwether for economic health - has observers watching Home Depot closely for signs of a downturn. The retailer is in its "Super Bowl season," Bastek said, referring to the spring and summer months when people tend to lawns, gardens and DIY home projects.
Several consumer-facing companies have issued gloomy quarterly results and pulled annual forecasts, citing economic uncertainty from shifting U.S. trade policies.
Trump’s recently announced 90-day trade agreement with China, which reduces tariffs to 30% from 145%, could cause supplier plans to alter drastically, analysts have said.
Home Depot has benefited from demand for tools used in smaller home projects, repair and maintenance.
But budget constraints continue to weigh on larger home renovation activities - which Decker acknowledged on Tuesday could be a result of macroeconomic fear.
On paper, Decker said, conditions seem good for big home projects: unemployment is low, inflation is trending down, and with housing turnover stubbornly low, people are staying in their homes rather than moving. "There are literally trillions of dollars of equity available to be tapped in the homes," Decker said, but added, "there’s still enough macro uncertainty" to discourage big projects.
Home Depot’s acquisition of SRS Distribution last year has boosted its ability to capture spending from the professional customer base, including contractors. Company executives noted the business was performing above expectations.
Still, its overall comparable sales dipped 0.3% in the quarter, compared with analysts’ expectations for a 0.15% drop, hurt by weak sales in February due to inclement weather.
Net sales for the quarter ended May 4 came in at $39.86 billion, compared with estimates of $39.31 billion, according to data compiled by LSEG. It logged adjusted profit per share of $3.56, missing expectations of $3.60.
The Atlanta-based company maintained its fiscal 2025 sales growth forecast of 2.8%, and adjusted profit-per-share decline of 2% from last year.