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Globe and Mail
12-06-2025
- Business
- Globe and Mail
Home Depot's Margins Hold Steady: Is Top-Line Growth Stalling?
Margins are a vital indicator of operational efficiency, and for The Home Depot Inc. HD, margins are its core strength. With its scale-driven cost leverage, tight inventory controls and robust supply chain, the retailer has consistently outperformed its peers on profitability. In first-quarter fiscal 2025, Home Depot maintained a gross margin of 33.8% and an adjusted operating margin of 13.2%, despite pressures from higher SG&A and integration of SRS Distribution. The ability to manage shrink, supply-chain productivity and pricing helped partially offset margin pressures, even as the company invested heavily in Pro ecosystem capabilities and digital tools like Magic Apron. This underscores its disciplined execution. However, top-line momentum tells a more tempered story. While total sales rose 9.4% to $39.9 billion—buoyed largely by acquisitions and calendar shifts—comparable sales declined 0.3%, with U.S. comps up just 0.2%. Big-ticket sales, often a barometer of remodeling demand, grew just 0.3%, as elevated interest rates weighed on demand for larger financed projects like kitchen and bath remodels. Instead, customers gravitated toward smaller DIY tasks and seasonal purchases, highlighting the ongoing macro sensitivity to elevated interest rates and sluggish housing turnover. Home Depot's Pro ecosystem expansion, digital tools like Magic Apron and exclusive brand deals are well-positioned to unlock future growth. However, without a rebound in large-scale renovation demand, fueled by easier credit or greater macro confidence, the company may find it challenging to convert margin resilience into sustained revenue acceleration. Home Depot's Competition From Margins Standpoint From a margin standpoint, Home Depot's main competitors are Lowe's Companies Inc. LOW and Walmart Inc. WMT. Home Depot typically maintains stronger net margins than Lowe's, driven by its scale, financial strength and operational efficiency. In first-quarter fiscal 2025, Lowe's posted a 33.4% gross margin and an 11.9% operating margin, with comparable sales down 1.7% due to weak big-ticket DIY demand and unfavorable weather. While Lowe's saw gains in Pro and online channels and continues to expand margin and ROIC, it still trails Home Depot in Pro penetration and supply-chain execution. The key difference lies in customer mix, Home Depot's more mature Pro ecosystem offers stability and higher margins, whereas Lowe's heavier DIY exposure makes it more sensitive to consumer spending shifts. Walmart, though significantly larger in revenues and similarly leveraged, operates with a very different margin profile than Home Depot. In first-quarter fiscal 2025, Walmart posted a gross margin of 24.2% and an operating margin of 5.1%, with a net profit margin of 2.75%, well below Home Depot's nearly 9%. Walmart's scale and grocery-heavy mix offer sales stability but limit margin upside. In contrast, Home Depot's focus on higher-margin categories like tools, appliances and Pro services supports stronger profitability. Walmart's pricing power is more exposed to rising costs and tariffs, prompting selective price hikes, while Home Depot's specialized model and margin flexibility help it maintain stable pricing. The Zacks Rundown for Home Depot HD shares have lost 7.3% year to date compared with the industry 's decline of 9%. From a valuation standpoint, Home Depot trades at a forward price-to-earnings ratio of 23.22X, significantly higher than the industry's 20.83X. It carries a VGM Score of A. The Zacks Consensus Estimate for HD's fiscal 2025 earnings implies a year-over-year decline of 1.3%, whereas its fiscal 2026 earnings estimates indicate year-over-year growth of 9.2%. The estimate for fiscal 2025 has been northbound in the past 30 days, while that for fiscal 2026 EPS has moved south in the same period. Home Depot currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Today, See These 5 Potential Home Runs >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Walmart Inc. (WMT): Free Stock Analysis Report Lowe's Companies, Inc. (LOW): Free Stock Analysis Report The Home Depot, Inc. (HD): Free Stock Analysis Report
Yahoo
23-05-2025
- Business
- Yahoo
Home Depot Vs Floor & Decor: Which Retail Stock Stands Taller?
In the dynamic world of home improvement retail, two powerful players are vying for dominance, but with very different playbooks. The Home Depot Inc. HD, the industry's undisputed heavyweight, commands the market with unmatched scale, an expansive product mix and a deeply entrenched national presence. Floor & Decor FND is a fast-moving challenger making waves with its focused, high-growth approach to hard surface Home Depot commands the lion's share of the market with its vast scale and legacy strength, Floor & Decor is swiftly gaining ground, leveraging its niche expertise and focused business model, and expanding its footprint to outperform expectations. As HD doubles down on breadth and infrastructure, FND is winning with precision and consumer preferences evolve and housing trends shift, the question looms large: Can specialization outpace scale? This face-off explores how the titans of scale and specialization are battling for market share and what it means for investors and the $1-trillion home improvement industry. Home Depot is a behemoth. With $39.9 billion in first-quarter fiscal 2025 sales, more than 2,350 stores, and a 25% share of the U.S. home improvement market, HD operates across nearly every product category. Its market dominance spans both DIY and Pro segments, offering unmatched breadth and logistics. In contrast, Floor & Decor's market share is a fraction of HD's share, but its narrow focus on hard surface flooring — tiles, wood, stone and laminates — has positioned it as a category killer. With aggressive store expansion and high-single-digit comp growth, FND is punching well above its comparing market share and key financial statistics, Home Depot maintains a clear and commanding lead over Floor & Decor in the U.S. home improvement landscape. Home Depot's business strategy is anchored in its unmatched scale, expansive product assortment and seamless omnichannel integration. Serving both DIY consumers and professional contractors, HD leverages a vast store network and robust service offerings. This includes the company's evolving Pro ecosystem, which has been significantly strengthened by the acquisition of SRS Distribution. The Home Depot brand is deeply associated with value, reliability and expertise, and continues to set the standard for in-store service and category leadership across all segments of the home improvement it evolves into a truly interconnected retail powerhouse, Home Depot is bridging the physical and digital with remarkable efficiency. Its AI-powered tool, Magic Apron, brings the in-store associate experience online, contributing to an 8% increase in digital sales in first-quarter fiscal benefit from fast, flexible delivery, seamless order pickup, and tailored support whether shopping on mobile, desktop or in-store. For associates, tools like Pocket Guide and emerging generative AI capabilities deliver real-time access to product knowledge and operational insights, fueling better customer engagement and higher conversion HD remains a model of consistency and shareholder value. In first-quarter fiscal 2025, the company delivered a 31.3% return on invested capital (ROIC), distributed $2.3 billion in dividends and continued its steady pace of capital investment to drive growth. With an estimated $50 billion in deferred home improvement demand still untapped, Home Depot is exceptionally well-positioned to capitalize on the next wave of renovation and remodeling activity, especially as interest rates normalize and macroeconomic confidence HD is strategically equipped to navigate global trade volatility and tariff pressure. More than 50% of its purchases are sourced domestically, and the company is aggressively diversifying its international supply base, ensuring that no single foreign country accounts for more than 10% of its sourcing. This sourcing agility, combined with HD's scale and deep vendor relationships, enables the company to maintain pricing stability and protect of passing costs on to consumers, HD is optimizing product assortments, driving productivity gains and using a portfolio-based approach to offset inflationary impacts, widening its competitive pricing edge in the marketplace. Floor & Decor is winning by doing one thing exceptionally well — hard surface flooring. Its specialized, high-volume model and warehouse-style stores enable low-cost operations and high inventory turns. FND appeals to Pro installers and style-conscious homeowners with curated, design-forward products at accessible prices. Its vertically integrated supply chain, direct sourcing and focus on value help differentiate the brand and drive repeat business. With aggressive store expansion plans, Floor & Decor is rapidly growing its footprint and market is leaning into digital to complement its in-store experience. Tools like online visualizers, virtual design consultations and localized inventory checkers create a user-friendly, confidence-building journey for home renovators. While still scaling its digital sophistication compared with HD, its tech investments are focused and aligned with its high-engagement, style-first shopping experience. The company's content-driven approach supports higher average ticket sizes and greater brand affinity among younger homeowners and design-focused is a growth stock with strong upside potential. Floor & Decor consistently delivers double-digit revenue growth and healthy margins due to its focused category dominance. Its lean operations and product control enhance gross profit and reduce the dependency on third-party suppliers. Though still expanding, the company has shown strong execution in new markets, making it a compelling long-term investment for those seeking exposure to specialty retail within the home improvement risks are real for Floor & Decor, given its reliance on imported flooring materials. However, the company's direct sourcing model and strong supplier relationships provide levers to mitigate cost inflation. FND has historically demonstrated an ability to adjust product mix, source from alternative countries and optimize assortments in response to cost pressures. While it may not have HD's scale advantage, its focused product strategy and price-sensitive customer base push the company to remain nimble and transparent in managing pricing. If tariffs persist or expand, Floor & Decor's ability to maintain value leadership and manage cost through vertical integration will be critical. Home Depot's fiscal 2025 revenues are projected to grow 2.9% year over year to $164.1 billion and EPS is expected to decline 1.4% year over year to $15.03. HD's EPS estimates for fiscal 2025 inched up 0.2% in the last seven days. Home Depot's annual sales and earnings are slated to increase 4.4% and 9.7% year over year, respectively, in fiscal 2026. Image Source: Zacks Investment Research Floor & Decor's 2025 sales are expected to increase 5.9% year over year to $4.7 billion and EPS is anticipated to decline 0.5% to $1.84. FND's EPS estimates for 2025 have moved down 7.5% in the past 30 days. Floor & Decor's annual sales and earnings are slated to increase 10.6% and 21.3% year over year, respectively, in 2026. Image Source: Zacks Investment Research This clearly illustrates that Home Depot has witnessed upward estimate revisions in the past seven days following its earnings release on May 20. However, Floor & Decor's consensus estimates reflected a significant decline in the last 30 days. In the last year, the HD stock had the edge in terms of performance, having recorded a total return of 12.7%, including dividends. This has noticeably outpaced the benchmark S&P 500's return of 10.1% and Floor & Decor's 35% decline. Image Source: Zacks Investment Research From a valuation perspective, Home Depot trades at a forward price-to-earnings (P/E) multiple of 23.69X, which is above its 5-year median of 22.28X. However, the HD stock trades below Floor & Décor's multiple of 37.22X and a 5-year median of 43.63X. Image Source: Zacks Investment Research At current levels, Home Depot's stock appears undervalued relative to Floor & Decor, offering a compelling opportunity for long-term investors. Despite its modest valuation, HD's pricing reflects strong fundamentals, anchored by deep alignment with Pro customers, a well-established and trusted private-label portfolio, and its continued dominance in the home improvement sector. With strategic investments in supply-chain efficiency, digital innovation and professional services, Home Depot is well-positioned to drive sustainable growth and further solidify its contrast, Floor & Decor's stock appears stretched from a valuation standpoint. While the company boasts strong top-line growth and a promising niche focus, its current market pricing may be running ahead of earnings potential, especially given its narrower customer base, operational scale and exposure to macroeconomic volatility. Home Depot stands out as a reliable dividend payer, returning $2.3 billion in first-quarter fiscal 2025 alone, with a yield typically between 2.5% and 3%, backed by strong cash flow and a 31.3% ROIC. Floor & Decor, by contrast, does not pay dividends, opting instead to reinvest aggressively in growth and expansion. HD appeals to income-focused investors, while FND targets those seeking capital appreciation over cash Depot offers a dividend yield of 2.48%, supported by a payout ratio of 59%, signaling a balance between rewarding shareholders and reinvesting in the business. HD has a five-year dividend growth rate of 10.6%. (Check HD's dividend history here) In the battle for dominance in the $1-trillion home improvement market, Home Depot stands out as the clear winner, leveraging its unmatched scale, resilient business model and proven ability to adapt. While Floor & Decor continues to impress with category-specific growth and strategic focus, the broader picture favors Home strong one-year total return, attractive valuation and consistent dividend payouts, along with strategic investments in digital innovation and Pro ecosystem expansion, reinforce its leadership position. Also, estimate revisions for HD have trended upward following its latest earnings report, reflecting growing optimism about its earnings potential. Meanwhile, FND's downward revisions raise caution despite its long-term growth the battle of specialization versus scale, Home Depot wins on execution, value and investor confidence, making it the more promising bet for long-term outperformance in the home improvement sector. Home Depot currently carries a Zacks Rank #3 (Hold), while Floor & Decor has a Zacks Rank #4 (Sell).You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Home Depot, Inc. (HD) : Free Stock Analysis Report Floor & Decor Holdings, Inc. (FND) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21-05-2025
- Business
- Yahoo
Home Depot is ‘laser focused' on elevating customer service through associates
This story was originally published on CX Dive. To receive daily news and insights, subscribe to our free daily CX Dive newsletter. The Home Depot's stores are the heart of its experience, and associates' product and project knowledge are its key differentiator, Ann-Marie Campbell, senior executive vice president of U.S. stores and operations, said on a Q1 2025 earnings call Tuesday. The home improvement retailer launched a training program for associates that educates them on localized product knowledge, according to Campbell. The company is also deploying worker-facing generative AI tools to make it easier to access Home Depot's knowledge base. The company aims to replicate the associate-led shopping experience online with the Magic Apron generative AI tool suite, according to EVP of Merchandising Billy Bastek. Magic Apron, which can answer customer questions, drove strong customer engagement and contributed to online conversion growth since it launched in March. Delivering a high level of service helps Home Depot win with professional contractors and DIY customers alike, according to Campbell. 'Customers come to the Home Depot to solve their home improvement problems and build their dreams, and it is our job to consistently deliver the best interconnected shopping experience,' Campbell said during the call. 'To do that, we must be laser focused on our associates and showing that we are providing the tools they need to continue to be engaged, knowledgeable and ready to serve our customers.' The retailer's investments in tools and technology are improving employee retention rates and employee engagement, according to Campbell. More engaged employees offer customers better service, which in turn improves customer satisfaction. Home Depot is investing in its employees against a backdrop of macroeconomic uncertainty. The company reported 9.4% year-over-year sales growth to $39.9 billion in the first quarter of 2025, according to an earnings report. Global comparable sales were down 0.3% year over year, though U.S. comparable sales rose 0.2%. Online sales were a bright spot for Home Depot. Sales through digital platforms were up 8% year over year, driven by investments in interconnected shopping experiences and faster delivery time, according to Bastek. 'Those customers benefiting from faster delivery are engaging more and spending more with us across our categories,' Bastek said. Home Depot will continue leaning into speed as a differentiator for the professional contractor experience, according to President and CEO Ted Decker. The company plans to complete an order management system upgrade by the end of the year that is expected to improve the number of on-time deliveries for pro customers. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Los Angeles Times
20-04-2025
- Business
- Los Angeles Times
Quicker Fixer-Uppers
The days of sauntering up to the hardware store counter in search of home improvement advice from a shop employee with an apron and a pencil behind an ear just took a futuristic turn, thanks to some new AI-based tech innovations debuting at the biggest named chains focused on 'do it yourself.' The Home Depot is rolling out Magic Apron, a proprietary suite of generative AI tools that helps customers answer how-to and product questions and assists them with their home improvement projects. Just in time for its busy spring selling season, Magic Apron is available 24/7 to assist with detailed questions for any spring product or project and beyond. 'Home Depot customers have always relied on the expertise of our orange-aproned associates in the aisles of our stores to answer questions and help them solve problems,' said Jordan Broggi, executive vice president of customer experience and president-online. 'Magic Apron is designed to bring that same expertise to the digital world, leveraging our proprietary knowledge base to support our customers and give them the confi- dence to tackle their home improvement projects, anytime, anywhere. So, whether you're staining a deck, searching for the latest grill or sprucing up the garden for spring, Magic Apron is ready to assist with your home project needs.' Powered by best-in-class large language models, Magic Apron is trained on The Home Depot's proprietary project expertise and product catalog as well as information from across the Internet to improve search results and answer customers' product and project questions. Say, for example, a customer is getting their lawn ready for spring. They may not know if aeration is needed, how to overseed bare spots, what products are needed for weed control or how to fertilize it. That's where Magic Apron comes in to answer questions with how-to instructions, product suggestions and more. Today, when customers research products on The Home Depot website, Magic Apron is now available to answer product questions, provide project guides and summarize product reviews. Magic Apron can currently be found on millions of product pages on and in The Home Depot's award-winning mobile app. The technology will soon expand to The Home Depot's Pro B2B site, offering enhanced sup- port tailored to professional contractors and business account users. In the coming months, Magic Apron will roll out new features and be accessible across Like a personal home improvement concierge, it will feature new functionality to assist customers with project inspiration, design ideas, product com- parison and recommendations, comprehensive advice and more. Magic Apron leverages The Home Depot's extensive proprietary knowledge base and the company's own human expertise to make the tool more accurate, reliable and helpful. The technol- ogy will continue to learn from customer and associate feedback and serve as a foundational tool for store and contact center associates to better help customers. Not to be left in the (construction) dust, competitor Lowe's newest 'associate' is called Mylow, the chain's own AI-powered virtual home improve- ment assistant. Now, Lowe's customers can navigate the many questions of owning a home, from project know-how to how-to advice to top- rated product searches and more. Developed in collaboration with OpenAI and leveraging Lowe's expert advice, Mylow deliv- ers the expertise of a trusted Lowe's associate anytime and anywhere, providing customers with clear steps and practical solutions for projects ranging in type and complexity all from the palm of their hand. Currently on desktop and mobile web, Mylow is available for MyLowe's Rewards loyalty members or by visiting the store's website. Customers can also expect Mylow voice capabilities and avail- ability on the Lowe's app later this year. This new trend appears to be an industry- sweeping phenomenon in the home improvement space.
Yahoo
06-03-2025
- Business
- Yahoo
The Home Depot Introduces Magic Apron, a Suite of Advanced AI Tools to Help Customers with their Home Improvement Needs
ATLANTA, March 6, 2025 /PRNewswire/ -- The Home Depot®, the world's leading home improvement retailer, is rolling out Magic Apron, a proprietary suite of generative AI tools that helps customers answer how-to and product questions and assists them with their home improvement projects. Just in time for its busy spring selling season, Magic Apron is available 24/7 to assist with detailed questions for any spring product, project and beyond. "Home Depot customers have always relied on the expertise of our orange-aproned associates in the aisles of our stores to answer questions and help them solve problems," said Jordan Broggi, executive vice president of customer experience and president - online. "Magic Apron is designed to bring that same expertise to the digital world, leveraging our proprietary knowledge base to support our customers and give them the confidence to tackle their home improvement projects, anytime, anywhere. So, whether you're staining a deck, searching for the latest grill, or sprucing up the garden for spring, Magic Apron is ready to assist with your home project needs." Magic Apron is the first of its kind in home improvement. Powered by best-in-class large language models, Magic Apron is trained on The Home Depot's proprietary project expertise and product catalog as well as information from across the Internet to improve search results and answer customers' product and project questions. Say, for example, a customer is getting their lawn ready for spring. They may not know if aeration is needed, how to overseed bare spots, what products are needed for weed control, or how to fertilize it. That's where Magic Apron comes in to answer questions with how-to instructions, product suggestions and more. Today, when customers research products on Magic Apron is available to answer product questions, provide project guides and summarize product reviews. Magic Apron can currently be found on millions of product pages on and in The Home Depot's award-winning mobile app. The technology will soon expand to The Home Depot's Pro B2B site, offering enhanced support tailored to professional contractors and business account users. In the coming months, Magic Apron will roll out new features and be accessible across Like a personal home improvement concierge, it will feature new functionality to assist customers with project inspiration, design ideas, product comparison and recommendations, comprehensive advice and more. Magic Apron leverages The Home Depot's extensive proprietary knowledge base and the company's own human expertise to make the tool more accurate, reliable and helpful. The technology will continue to learn from customer and associate feedback and serve as a foundational tool for store and contact center associates to better help customers. About The Home Depot The Home Depot is the world's largest home improvement retailer. At the end of the fourth quarter of fiscal 2024, the company operated a total of 2,347 retail stores and over 780 branches across all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. The Company employs over 470,000 associates. The Home Depot's stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index. View original content to download multimedia: SOURCE The Home Depot Sign in to access your portfolio
