Home Depot reported stronger-than-anticipated results in a key sales metric, driven by steady consumer demand, though the retailer cautioned that macroeconomic challenges persist.

Fourth-quarter revenue reached $38.2 billion, down 3.8% year over year but surpassing expectations by $100 million. Adjusted earnings per share came in at $2.72, exceeding forecasts by $0.20. Comparable sales, which track stores open for at least one year, rose 0.4% during the quarter ending February 1, outperforming average projections. These figures indicate sustained stability in home improvement spending despite elevated interest rates and ongoing inflation concerns.

The company noted it has gained additional market share, while e-commerce sales grew at a double-digit rate for the third consecutive quarter. However, a meaningful shift in housing demand has yet to materialize. Home Depot expects total sales growth for fiscal 2026 to be between 2.5% and 4.5%, below the previously projected 4.06% increase. Comparable sales are forecast to rise between 0% and 2.0%.

Chief Financial Officer Richard McPhail commented in an interview that customers have been delaying major renovation projects for three years. While homeowners remain one of the healthiest consumer segments, they are expressing increased uncertainty, including concerns about housing affordability and the risk of job cuts.

Some early positive signals have emerged in the housing market: mortgage rates have declined, and median home prices have remained relatively stable over the past year. Still, McPhail emphasized that further declines in mortgage rates and more substantial income growth are needed to accelerate momentum. He noted that conditions are moving slowly in the right direction but lack a clear catalyst to significantly boost home improvement demand.

Home Depot reaffirmed its full-year outlook. Consumer confidence remains volatile, housing affordability challenges persist, and U.S. job growth nearly stalled last year. Recent shifts in trade policy have also introduced uncertainty, though McPhail stated the company has largely absorbed the impact of tariffs. Some product prices are expected to rise slightly in the first half of the year due to recent pricing adjustments.

At an investor event in December, executives highlighted that pent-up demand accumulated since 2023 should eventually translate into spending. Throughout an extended business slowdown, Home Depot has focused on its faster-growing professional contractor segment, which typically spends more than the average DIY customer. The company is also expanding its digital capabilities and introducing AI-enhanced shopping experiences. In response to trade pressures, it has diversified sourcing.

The retailer recently reduced corporate roles and implemented return-to-office policies in an effort to reignite growth. It has also tightened criteria for management bonuses.

Home Depot is among the latest major retailers to report this earnings season. Its primary competitor, Lowe’s, is scheduled to release results on Wednesday. Last week, Walmart offered a cautious outlook, citing a fluid economic environment, though it also noted consistent consumer spending habits and moderating price increases across many categories.