Home Depot Forced To Cut Earnings Outlook Due to Reluctant Homeowners and Lack of Severe Storm Damage Pushing Demand 

While the 2025 hurricane season lived up to this “above normal activity” forecast, thankfully none of the 13 named storms made significant landfall in the US. 

With fewer violent storms wreaking havoc and homeowners still wary of committing to home improvement jobs due to increased prices, Home Depot’s third quarter was down year over year. It is the third consecutive quarter that the company has missed profit expectations.

In response, company leadership announced and adjusted their fiscal 2025 projected earnings.

A dip in sales or a sign of the times? 

For the three months ending Nov. 2, Home Depot earned $3.6 billion, or $3.62 per share, reported the Associated Press. A year earlier it earned $3.65 billion, or $3.67 per share.

Given the news, Home Depot’s stock declined more than 3% on Tuesday, while shares of rival Lowe’s fell more than 2%.

Home Depot now anticipates fiscal 2025 adjusted earnings will decline approximately 5% from fiscal 2024’s $15.24 per share.

The good news is that despite the decline, the company actually raised its expectations for sales growth. While customer transactions fell 1.4% in the quarter, the amount shoppers spent rose to $90.39 per average receipt, which is up from $88.65 in the year-ago period.

Company leadership has acknowledged that the increased prices on core items like lumber, appliances, and fixtures, plus economic uncertainty at large has created hesitation in their customer base. 

“We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand,” CEO Ted Decker said in a statement.

“Our customers tell us that they remain on the sidelines due to uncertainty and perhaps the hesitation to make larger financial commitments amid an uncertain economic environment,” added Chief Financial Officer Richard McPhail to the Wall Street Journal.

A quiet storm season

Perhaps the biggest hit to Home Depot's numbers was the lack of significant storm activity in the third quarter.

During a more active season, sales for roofing, power generation, and plywood increase due the needs of home preparation and repair. 

But the Atlantic hurricane season was pretty active. Though down from the 18 storms in 2024, there were still 13 named storms in 2024, three of which reached Category 5. Hurricane Melissa will go down in history as one of the strongest storms on record to make landfall in the Atlantic Basin.

But given that none of these storms made landfall, there was less need for homeowners to make necessary repairs to their homes, thus overlooking the price increases of basic home improvement items. 

Housing market impact

Both McPhail and Decker conceded that the current state of the housing market also is playing a factor in their lower numbers. 

“Our customers are homeowners. They are seeing home prices now decline in more markets than rising, and we know they have job concerns,” McPhail said. “This all comes together in the form of hesitation to take on larger financial commitments.”

However, with home equity values up and the current stock starting to show its age, a turnaround in home improvement demand is around the corner. And if rates start to come down again, there may even be a new generation of homeowners to cater to. 

“We’re watching movements in mortgage rates closely. So far we have not seen them catalyze demand in home improvement,” McPhail said. “While we don’t see a near-term catalyst for acceleration of home improvement demand, we’re also bullish on the long-term fundamentals of housing.”