• Total Sales for Fiscal 2024: $159.5 billion, an increase of 4.5% from the previous year.
• Fourth Quarter Sales: $39.7 billion, an increase of approximately 14% from last year.
• Comp Sales for Fiscal 2024: Decreased 1.8% overall, with US stores also down 1.8%.
• Fourth Quarter Comp Sales: Increased 0.8% overall, with US stores up 1.3%.
• Adjusted Diluted Earnings Per Share for Fiscal 2024: $15.24, compared to $15.25 in the prior year.
• Fourth Quarter Adjusted Diluted Earnings Per Share: $3.13, compared to $2.86 in the prior year.
• Gross Margin for Fiscal 2024: Approximately 33.4%, an increase of 5 basis points from last year.
• Fourth Quarter Gross Margin: Approximately 32.8%, a decrease of 25 basis points from the previous year.
• Operating Margin for Fiscal 2024: 13.5%, compared to 14.2% in 2023.
• Fourth Quarter Operating Margin: 11.3%, compared to 11.9% in the previous year.
• Store Count at End of Fiscal 2024: 2,347 stores, with 12 new stores opened during the year.
• Inventory at End of Fiscal 2024: $23.5 billion, up approximately $2.5 billion from last year.
• Capital Expenditures for Fiscal 2024: Approximately $3.5 billion.
• Dividends Paid in Fiscal 2024: Approximately $8.9 billion.
• Return on Invested Capital: Approximately 31.3%, down from 36.7% in the previous year.

• Warning! GuruFocus has detected 5 Warning Signs with HLIO.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The Home Depot Inc (NYSE:HD) reported a 4.5% increase in total sales for fiscal 2024, reaching $159.5 billion.
• Fourth-quarter results exceeded expectations with a 0.8% increase in comp sales and a 1.3% increase in US store comps.
• The acquisition of SRS contributed $6.4 billion in sales for the seven months since acquisition, with plans for further growth.
• Investments in delivery capabilities have resulted in the fastest delivery speeds in company history, enhancing customer satisfaction.
• The company opened 12 new stores in fiscal 2024, with plans to open 13 more in fiscal 2025, supporting growth in high-demand areas.

Negative Points

• Comp sales declined 1.8% for the year, with US stores also experiencing a 1.8% decline.
• Higher interest rates continue to pressure larger remodeling projects, impacting overall demand.
• Operating margin decreased to 11.3% in the fourth quarter, down from 11.9% in the previous year.
• Adjusted diluted earnings per share for fiscal 2024 were essentially flat compared to the prior year.
• The company expects adjusted diluted earnings per share to decline approximately 2% in fiscal 2025.

Q & A Highlights

Q: What is Home Depot's outlook on the macro housing backdrop and its impact on comp sales? A: Edward Decker, CEO, stated that while there was a slight increase in housing turnover in Q4, they do not expect a significant rebound. The company anticipates that consumers will eventually tap into their home equity for larger remodeling projects, but this may not happen at an accelerated pace in 2025. Richard McPhail, CFO, added that the 1% comp sales growth expectation considers continued pressure on larger projects and includes the SRS acquisition's impact.

Q: How does Home Depot view its market share growth, especially with the SRS acquisition? A: Edward Decker, CEO, explained that Home Depot expects to gain market share through its interconnected retail experience and Pro ecosystem investments. The SRS acquisition is expected to grow faster than the core business, contributing to overall growth. The company does not believe its market share has peaked in either the DIY or Pro segments.

Q: Can you elaborate on the impact of SRS on Home Depot's financials and margins? A: Richard McPhail, CFO, noted that SRS contributed $6.4 billion in sales for the seven months of ownership in fiscal 2024. The acquisition has a mix impact of about 40 basis points on Home Depot's operating margin. Despite this, SRS is performing well, and Home Depot is pleased with its contribution to both top and bottom lines.

Q: What are the key challenges in rolling out complex Pro capabilities, and how is Home Depot addressing them? A: Ann-Marie Campbell, Senior Executive VP, highlighted that the complexity lies in integrating various components of the Pro ecosystem, such as sales force expansion and delivery improvements. The focus is on refining and perfecting these capabilities in the 17 markets where they have been rolled out, ensuring they meet Pro customer needs effectively.

Q: How does Home Depot plan to manage potential impacts from government policies and tariffs? A: Edward Decker, CEO, mentioned that Home Depot has not seen significant impacts from recent government policies. The company is well-prepared to navigate any tariff changes due to its diversified sourcing strategy. They also monitor tax policies closely, as they are a full taxpayer, and any changes could affect their financials.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.