Home Depot CEO warns about a worrying shopper trend and points to one major reason

There are a number of factors that affect a company's valuation on the market. Home Depot CEO Ted Decker has blamed a concerning trend in the home improvement market for the company's lower-than-expected earnings in the third quarter. The retail chain is struggling to increase sales, battling a decline in demand and increasing costs in an uncertain housing market. Now, the CEO has sounded the alarm over consumers holding back on making big home improvements in a tariff-driven economy, an apparent "lack of storms", and pressure on the housing market, forecasting a bigger drop in full-year profits. 

In Home Depot’s third-quarter earnings call, the company revealed that its sales increased by only 0.1% year-over-year, which was well below Wall Street's expectations, as per Reuters. Hope Depot's stock dropped 0.4% during the quarter, while it generated an operating income of $5.3 billion, 1.2% less than the same in the third quarter of 2024. Data from Placer.ai further showed that foot traffic at stores dropped by 0.4% as well during the quarter, compared to the same time period last year.

Talking about the drop in numbers, CEO Decker said that it was "primarily due to the lack of storms." Decker explained that last year, the company saw a slight boost in sales as Americans bought supplies to prepare for hurricanes Helene and Milton, which ravaged through several southern states in September and October, 2024. He added that the lack of such events impacted several areas of the business, including plywood, roofing, and power generation. “The storm activity and the rebuild and repair continued into Q4 (the fourth quarter) last year,” said Decker, adding that Home Depot will continue to see lower sales for the rest of the year, as compared to last year, The Street reported.

Decker also talked about the tariff-driven economy and the uncertain housing market, which has put American households under pressure. “What’s impacting us and home improvement is the ongoing pressure in housing, in incremental consumer uncertainty,” he said, warning that the company will continue to see "softer engagement in larger discretionary projects" as customers usually use financing for such renovation. He added that Home Depot is being affected by a cumulative underspend of $50 billion in normal repair and remodel activity in the country.

The Home Depot CEO further added that the concerns about the high cost of living and the job market have also impacted sales. “We still believe we have one of the healthiest consumer segments in the whole economy. But again, the economic uncertainty continues largely now due to living costs, affordability, a word that’s being used a lot, layoffs, increased job concerns, etc. So that’s why we don’t see an uptick in that underlying storm-adjusted demand in the business," he said.

The weak Q3 report comes after Home Depot implemented a “modest” price increase in response to President Donald Trump’s tariffs. “For some imported goods, tariff rates are significantly higher today than they were at this time last quarter,” the company's finance chief Richard McPhail said in an interview with the Wall Street Journal in August. Furthermore, many customers have been reducing spending on everyday goods as well, due to tariffs, The Street reported.

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