Author: Savyata Mishra and Nicholas P. Brown
(Reuters) - HOME Warehouse said on Tuesday that while U.S. tariffs could make certain products unavailable in the Home-Sprivement Chain, it will keep prices unchanged, which could be obtained on the Home-Sprivement Chain, which also reported estimates for the first-quarter sales show.
Billy Bastek, vice president of merchandise sales at Home Depot, told analysts that the company intends to "keep prices in our portfolio."
But that means some products may disappear from the shelves.
“We have some items that could be affected by tariffs and frankly, if there is no point within the online structure, we won’t move forward,” Bastek said. He did not list any specific items that could be affected.
Consumer-facing companies are one of the companies that have had the biggest impact on high tariffs on imports by U.S. President Donald Trump. Some have released frustrating quarterly results and have proposed annual forecasts due to economic uncertainty. Walmart, the country’s largest retailer, warned last week that shoppers will soon face higher prices due to tariffs.
Trump later suggested that Walmart should "eat" higher costs.
Atlanta-based Home Depot is not as good as Walmart to contact China. It comes from less than half of the goods outside North America and has cut risks to China in recent years. CEO Ted Decker told investors that no country outside the U.S. will account for more than 10% of its purchases in the next 12 months.
Net sales for the quarter ended May 4 were $39.86 billion, or an estimated $39.31 billion, according to data compiled by LSEG. It recorded $3.56 per share adjusted profit and lost expectations of $3.60.
Sheraz Mian, research director at Zacks Investment Research, said the company may be able to rely on suppliers to bear the brunt.
"But if they promise no incremental impact on the final consumer, they will have to absorb the remaining tariff charges internally, which will reach profit margins," he added.
The company's operating margin fell to 12.9% in the quarter, down from 13.9% in the same period last year.
Budget limits
The recent slowdown in home improvement retail (often seen as a leader in economic health) has brought observers to keep an eye on Home Depot to see signs of a downturn. Basterke said retailers are in the "Super Bowl season" referring to spring and summer people tend toward lawns, gardens and DIY home projects.
Budget restrictions continue to weigh on larger home improvement activities, which Decker admitted on Tuesday could be a consequence of macroeconomic fears.
On the surface, conditions seem to be suitable for large projects: low unemployment, lower inflation, and stubbornly low housing turnover, people stay at home instead of moving, Decker said.
"Literally, there are trillions of dollars in equity available for homes," Decker said, but added that "there is still enough macro uncertainty" to stop large projects.
Home Depot's acquisition of SRS distribution last year enhanced its ability to capture spending from a professional client base, including contractors. Company executives pointed out that the business performed better than expected.
Analysts say the company's commitment to avoiding price increases could help the warehouse increase its market share. "We expect the price gap to be even bigger than the smaller competitors," Jefferies analyst Jonathan Matuszewski said in a report Tuesday.
The company's overall comparable sales fell 0.3% in the quarter, and was weaker in February due to bad weather. Analysts expect a 0.15% decline.
Its fiscal 2025 sales growth forecast is 2.8%, down 2% from last year's adjusted profit per share. Stocks fell 0.5% on Tuesday.
(Reports by Savyata Mishra in Bangalore and Nicholas P. Brown in New York; Editing by Devika Syamnath, Matthew Lewis and David Gregorio)