Shares in Home Depot (HD) stock are up 3.3% today and 13.4% in the past month after its latest earnings report showed mixed results. While sales were higher last quarter for the Home Improvement corporation, they slightly missed Wall Street’s estimates. Fortunately, Home Depot returned to consistent same-store sales growth in the US amid signs that a prolonged slump in the US housing market is starting to thaw. However, the company also revealed it may need to raise prices to account for growing tariff concerns.
Until now, Home Depot hasn’t said much about the impact of tariffs on its prices, unlike other companies. But after Tuesday’s earnings report, CFO Richard McPhail said Home Depot would have to implement some price increases as a result of the Trump administration’s taxes on imports. “For some imported goods, tariff rates are significantly higher today than they were at this time last quarter,” he said in an interview with the Wall Street Journal. “So as you would expect, there will be modest price movement in some categories, but it won’t be broad-based.”
US Tariffs Continue to Haunt Major US Companies like Home Depot
US tariffs have been a huge talking point amongst investors in the US stock market since April. The sweeping tariffs on numerous European countries with close ties to US companies sent those respective stocks down in the last few months. From Mag-7 members to tech giants, many companies were hit hard. Previously, Home Depot said it would not speculate on its price plans, but that tariffs might lead it to no longer offer some items. Now though, the company is officially sending some prices upwards, following in the footsteps of other major corporations.
Home Depot said that a little less than half of its inventory comes from suppliers outside the United States. The company has previously said it was looking to diversify its supply base so that no foreign country supplied more than 10% of its goods. Furthermore, the company is hoping to see stronger gains in sales in the future, sparked by a bit more certainty in the US economy. “When we talk to our customers… both consumers and pros, the number one reason for deferring the large project is general economic uncertainty,” CEO Ted Decker said on the earnings call. “That is larger than the prices of projects, of labor availability. By a wide margin, economic uncertainty is number one.”
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At press time, Home Depot HD stock is trading at $405. The company remains optimistic on its growth potential, reaffirming its full-year guidance amid a challenging housing market.