Home Depot — Financial Results

Revenue Growth Is Being Driven by Acquisitions, Not Organic Traffic

Total sales grew 3.2%, but nearly all of that came from the SRS and GMS acquisitions, which together contributed $6.3 billion in additional sales. The underlying store base is barely growing — comparable sales (a measure of how existing locations are performing) rose just 0.3%, with fewer customer visits partially offset by slightly higher spending per trip. The company attributes the sluggish foot traffic to high interest rates cooling demand for larger home improvement projects.

Profits Are Shrinking Even as Sales Rise

Despite higher revenues, net earnings fell from $14.8 billion to $14.2 billion. SG&A (selling, general and administrative) expenses — the day-to-day cost of running the business — rose to 18.6% of sales from 18.0%, driven by higher payroll and the absence of a one-time legal benefit recorded in fiscal 2024. The acquisitions are also adding amortization costs that weigh on reported profits.

The GMS Acquisition Extends the Company's Push Into Professional Construction

Home Depot acquired GMS, a distributor of specialty building products like drywall, steel framing, and ceiling products, for approximately $5.5 billion, completing the deal in September 2025. GMS becomes a subsidiary of SRS, which Home Depot acquired in mid-2024, continuing a strategy of building out a distribution network that serves professional contractors beyond what retail stores can offer. This is a meaningful strategic shift — the company is becoming more than just a hardware retailer.

Debt Is Elevated and Share Buybacks Remain Paused

Home Depot ended fiscal 2025 with $48.8 billion in senior notes outstanding and $4.5 billion in commercial paper (short-term borrowing) at a 3.7% interest rate. The company paused share repurchases in March 2024 to manage debt taken on for the SRS acquisition, and explicitly stated it does not plan to resume buybacks in fiscal 2026. Return on invested capital (ROIC) — a measure of how efficiently the business uses the money invested in it — dropped from 31.3% to 25.7%, largely because the acquisition debt has expanded the capital base faster than earnings have grown.

The Dividend Keeps Growing, and Cash Generation Remains Strong

Home Depot generated $16.3 billion in operating cash flow in fiscal 2025 and paid $9.2 billion in dividends to shareholders. In February 2026, it announced a 1.3% dividend increase to $2.33 per share per quarter. Despite the acquisitions and debt load, management stated it believes current cash flow is sufficient to cover operations, debt payments, dividends, and future investments through the next several fiscal years.

Tariffs Are a Managed but Unresolved Risk

The company acknowledged that tariffs increased its costs in fiscal 2025, but said it was able to offset the impact through supply chain diversification, vendor negotiations, and some price increases passed to customers. However, it explicitly noted it cannot predict the future impact of ongoing trade policy changes — a meaningful caveat for a retailer that sources a large portion of its products globally.