Home Depot Inc Q3 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Simeon Gutman - Morgan Stanley & Co Ltd - Analyst : Hey, good morning, everyone. My first question is more short term on the fourth quarter. So when you guided for the full year after the second quarter, we didn't have GMS in the numbers; and now we do. And then we now know your third quarter came in a little light and that the fourth quarter may be a little lighter on revenue as well. So there's some deleverage. We're having a tough time getting to the full amount of, call it, EBIT dollar shortfall because GMS looks like they made money last year. Are there any expenses that are tied to it, or how do we think about the deleverage?

Question: Simeon Gutman - Morgan Stanley & Co Ltd - Analyst : Yeah, that helps a lot. Thanks. And then a follow-up. You mentioned on this call and in the release that there was an expectation of increased or improving demand, I guess, for the remainder of the year at one point. Was that an expectation based on housing or an expectation that there would be storms? And if there was any volatility related to government shutdown, do you have enough time looking backwards since the reopening that there's been an improvement in how the consumer is behaving?

Question: Simeon Gutman - Morgan Stanley & Co Ltd - Analyst : Okay, thanks. Thanks. See you in two weeks.

Question: Zachary Fadem - Wells Fargo Securities LLC - Analyst : Hey, good morning. Wanted to start on the average ticket. I guess, any call-outs on commodities versus same-SKU inflation? And then with last quarter ticking down on promo, curious how Q3 played out and whether you'd expect the industry to be more or less promotional this Q4.

Question: Zachary Fadem - Wells Fargo Securities LLC - Analyst : Got it. And then, Richard, a couple of follow-ups on GMS. First of all, on operating expenses, could you help us understand what's one time in terms of impact transactions, et cetera, on Q3 and Q4? And then on the inventory growth, up about 10%, any color you can offer on how much is GMS versus underlying volume versus pricing? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. NOVEMBER 18, 2025 / 2:00PM, HD.N - Q3 2025 Home Depot Inc Earnings Call

Question: Zachary Fadem - Wells Fargo Securities LLC - Analyst : Thanks for the time. See you in a couple of weeks.

Question: Michael Lasser - UBS AG - Analyst : Good morning. Thank you so much for taking my question. Given all the comments from this morning, it begs the question, can home improvement demand recover without some assistance from either an increase in underlying housing activity or a reduction in interest rates? And how should this foster the market's expectation towards the recovery or potential recovery in 2026? Thank you very much.

Question: Michael Lasser - UBS AG - Analyst : Thank you for that. My second question is, as The Home Depot has taken a significant number of big steps over the last few years to gain market share, particularly in the Pro segment, has The Home Depot increased its fixed cost structure, such that it's now experiencing deleverage as sales are under pressure, but this can act as a significant tailwind to the earnings outlook as sales improve? Thank you very much.

Question: Michael Lasser - UBS AG - Analyst : Thank you very much, and good luck.

Question: Christopher Horvers - JPMorgan Chase & Co - Analyst : Thanks. Good morning. So I wanted to follow up on the implied 4Q operating margin question. It looks like you're saying about 10.3%. Did you say that 50 basis points of that was the 53rd week lap? And is there anything like unique that we should think about that this is not -- this is or is not the right level to start to think about building the business as we look to the out-year? So for example, 53rd week lap or perhaps the seasonality of the SRS and GMS business structurally changing the normal flow of operating margin over the year?

Question: Christopher Horvers - JPMorgan Chase & Co - Analyst : That's super helpful. Thank you. I mean, if you step back about (multiple speakers) --

Question: Christopher Horvers - JPMorgan Chase & Co - Analyst : Got it. Makes sense. If you think about this quarter, I mean, if you look at the monthly basis, even with the really tough weather/hurricane-driven compare in October, if you also look at the last -- the first three quarters of the year, the two-year trend seems to be improving on the line, which points to replacement cycle demand and maybe some pricing and just life moves on. I guess -- and then there's some research out there that points to maybe the consumer is waiting for the full effect of the head. We have a couple of meetings coming up. And you had all this noise with a government shutdown that impacted even retailers that sell milk and eggs, and take share every day. So why wouldn't we think that the launch point into 2026 is, sort of, 1 -- or if not better than this 1%, sort of, underlying demand? Just because uncertainty goes away, full effect to the Fed, housing stock ages, and life moves on, and replacement cycle demand continues to build. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. NOVEMBER 18, 2025 / 2:00PM, HD.N - Q3 2025 Home Depot Inc Earnings Call

Question: Christopher Horvers - JPMorgan Chase & Co - Analyst : Right, offset by a tick of transaction fees?

Question: Christopher Horvers - JPMorgan Chase & Co - Analyst : Awesome. Thanks so much. We'll see you soon.

Question: Zhihan Ma - Sanford C Bernstein & Co LLC - Analyst : Hi, thank you. I wanted to follow up on the complex Pro and GMS side. So firstly, a short-term question, the $2 billion contribution to sales from GMS this year, I think if we do the math based on the reported numbers last year, kind of implies a high single-digit-percentage decline on a year-over-year basis. I don't know if I completely got the math right. If that's true, how much of that is macro weakness versus underlying share dynamics? And is there any additional color you can provide on that underlying market?

Question: Zhihan Ma - Sanford C Bernstein & Co LLC - Analyst : Got it. Thank you. And then a long-term question to your point about the current margin dilution impact from the acquisitions. Is there a long-term argument that as you further consolidate, assume if you further consolidate in the complex Pro space, is there a path for you to structurally improve or recover your margins as you start to gain more bargaining power versus suppliers? Thank you.

Question: Zhihan Ma - Sanford C Bernstein & Co LLC - Analyst : Got it. Thank you very much. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. NOVEMBER 18, 2025 / 2:00PM, HD.N - Q3 2025 Home Depot Inc Earnings Call

Question: Seth Sigman - Barclays Services Corp - Analyst : Hey, good morning, everyone. I had a couple of follow-up questions. Just first on transactions slowed while ticket accelerated this quarter. Just curious, how do you read that? Are there any signs of elasticity? Maybe just elaborate on price changes that you made in the quarter. Or is the slowdown in transaction just really storm-related?

Question: Seth Sigman - Barclays Services Corp - Analyst : Okay. Thanks for that. And then just to follow up on some of the demand comments today and what seems like a more cautious view on the consumer, I'm just trying to figure out how to reconcile that with big ticket still outperforming? You've had a few quarters of big ticket being positive that continued this quarter. And I guess, just based on what you've seen historically, should that be a leading indicator for big projects that have still been pressured? How do you think about that?

Question: Seth Sigman - Barclays Services Corp - Analyst : Got it. Okay. That's helpful. Thanks so much.

Question: Charles Grom - Gordon Haskett Capital Corp - Analyst : Hey, thanks a lot. Good morning. There's a lot of talk about a K-shaped economy right now. But we're starting to see more evidence of job losses for white-collar employees. So I guess, I'm curious when you look at your data, is there anything you see that supports more fatigue in your upper-income customer base? And I guess, as a follow-up, anything regionally that you'd call out over the past couple of months?

Question: Charles Grom - Gordon Haskett Capital Corp - Analyst : Okay. Thank you. And then just, Richard, can we just double-click on the opportunity to improve the margin structures of both GMS and SRS? It sounds like 35 basis points of pressure this year. You probably have some wrap of that into '26. But just like broader picture over the next few years, I mean, how should we think about the improvement line for those two businesses? Thanks. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. NOVEMBER 18, 2025 / 2:00PM, HD.N - Q3 2025 Home Depot Inc Earnings Call

Question: Charles Grom - Gordon Haskett Capital Corp - Analyst : Thank you.

Question: Steven Forbes - Guggenheim Securities LLC - Analyst : Good morning. Maybe, Richard, on the idea of cross-selling, I would love to sort of hear high-level thoughts on -- I don't know

Question: Steven Forbes - Guggenheim Securities LLC - Analyst : And then just a quick follow-up. I was hoping to maybe explore the branch growth opportunity across SRS, DMS, and Heritage. So I don't know, Ted, if you can provide a current update on branch counts across the various assets? And then, like, what's the right way to think about or think through the out-year branch growth opportunity? And I don't know if you can, sort of, talk about, like, what's the end state as you see it today versus the 1,200 you have today? How do we sort of think about the footprint evolving over the next three, five, or so years? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. NOVEMBER 18, 2025 / 2:00PM, HD.N - Q3 2025 Home Depot Inc Earnings Call

Question: Steven Forbes - Guggenheim Securities LLC - Analyst : Thank you.

Question: Steven Zaccone - Citibank Cameroon SA (Douala Branch) - Analyst : Great. Good morning. Thanks so much for squeezing me in. I wanted to follow up on the storm impact. So it sounds like it was 80 basis points for the third quarter, pressure to same-store sales. How large will that be in the fourth quarter? And then we should be mindful that that's also a headwind to think about in the first half of next year.

Question: Steven Zaccone - Citibank Cameroon SA (Douala Branch) - Analyst : Okay. Understood. And then your comments on the housing pressure, how does that inform you maybe near to medium-term outlook for SRS and GMS, right? Like, these are new assets for Home Depot. So should we think that original expectation of mid-single-digit growth for SRS stepping down to low single digits? Is that kind of a run rate we should consider for the near to medium term?

Question: Steven Zaccone - Citibank Cameroon SA (Douala Branch) - Analyst : Okay. Understood. See you guys in two weeks.