The company’s earnings held steady as Q2 sales rose, with executives predicting only targeted, not sweeping, price increases for consumers.
Home Depot has announced that some of its prices will be rising because of tariff-related costs, with an executive describing the increases as “modest” and affecting only a limited number of product categories.
America’s largest home improvement retailer reported second-quarter results on Aug. 19, posting sales of $45.3 billion, up nearly 5 percent from a year earlier. Comparable U.S. sales rose 1.4 percent, while earnings came in at $4.6 billion, essentially flat compared to the same period last year.
The quarter marked a continuation of the trend Home Depot saw in the first quarter, when sales were $39.9 billion, up more than 9 percent from a year earlier but with earnings under modest pressure. In both quarters, management highlighted signs of improving market share.
Following the release, Chief Financial Officer Richard McPhail told The Wall Street Journal that the company will end up passing on at least some of the higher costs from the U.S. tariffs on foreign imports.
“For some imported goods, tariff rates are significantly higher today than they were at this time last quarter,” McPhail said. “So as you would expect, there will be modest price movement in some categories, but it won’t be broad-based.”
Three months ago, on the company’s first-quarter earnings call, executives struck a similar note when asked about tariff impacts. Billy Bastek, executive vice president of merchandising, said Home Depot intended to “generally maintain pricing” across its portfolio, pointing to its diversified supply chains and productivity initiatives as buffers.
“We don’t see broad-based price increases for our customers at all going forward,” Bastek said at the time, predicting “limited impact” from tariffs, in part due to plans to rely on the “tremendous flexibility” of its supply chains to switch out line items hit by higher levy costs.
Bastek added that less than half of the company’s inventory comes from outside the United States and that no foreign country supplies more than 10 percent of its goods.
By Tom Ozimek
