The Home Depot reports second quarter fiscal 2026 results before the US market opens on Tuesday, August 18, and the report arrives under unusual circumstances. The company confirmed on August 12 that chair, president and chief executive Ted Decker had begun a temporary medical leave, handing day to day oversight to a two executive interim arrangement. The quarter will therefore be presented by stand in leadership at the exact moment investors want clarity on tariffs, housing and the second half.
Wall Street expects a quarter that grows on the top line and barely moves on the bottom line. Consensus estimates compiled by Zacks put adjusted earnings near $4.71 per share on revenue of about $47.5 billion, which would be roughly 0.6% earnings growth on 4.9% sales growth. Other consensus sets, including figures published by TIKR, cluster slightly differently at about $4.73 per share on roughly $47 billion. The gap between those two lines, sales up nearly 5% and earnings up well under 1%, is the entire story of this print.
In short
- Report date: Home Depot publishes Q2 fiscal 2026 results on Tuesday, August 18, 2026, before the opening bell, with a management call to follow.
- Consensus: analysts expect adjusted EPS of roughly $4.71 to $4.73 on revenue of about $47 billion to $47.5 billion, implying near flat earnings on mid single digit sales growth.
- Leadership: the quarter is being reported by an interim office of the chief executive after Ted Decker began a temporary medical leave announced on August 12.
- Margin pressure: first quarter gross margin fell about 75 basis points year on year to roughly 33%, and guidance assumes the drag eases in the back half.
- Tariff timing: new Section 338 duties of 50% on a long list of Canadian goods take effect on August 19, one day after the print, which makes forward commentary more valuable than the quarter itself.
What Home Depot actually reports on August 18
The company will publish results for the quarter ended in early August, its fiscal second quarter, historically the strongest period of the year because it captures the spring and early summer project season. Home Depot has confirmed the August 18 date and will host a management call and webcast, with materials posted to its investor relations site.
Four numbers will move the stock. Comparable sales is the first, because it strips out new stores and shows whether existing locations are genuinely busier. Gross margin is the second, because it captures both tariff costs and product mix. Average ticket versus transaction count is the third, because it separates inflation from real demand. Full year guidance is the fourth, and in a year like this one it may matter more than the other three combined.
Seasonality is worth holding in mind when reading the print. The fiscal second quarter captures the peak of outdoor projects, garden, and seasonal categories, so it carries structurally higher volume and slightly different margin mix than the rest of the year. A weak second quarter is harder to recover from than a weak first quarter because the calendar does not offer a second attempt.
The reporting quarter also predates the trade measures now dominating the narrative. Investors reading the release should therefore treat the historical figures as a baseline and the management commentary as the actual news event.
Consensus for the quarter sits close to $4.71 per share on about $47.5 billion of revenue, according to estimates compiled by Zacks. Analysts also model sales per store of roughly $19.40 million against $19.24 million a year earlier, a modest productivity gain that implies the store base is working slightly harder rather than dramatically better.
For context, Home Depot reported second quarter fiscal 2025 net sales of $45.3 billion, up 4.9% year on year, with comparable sales up 1.0% and US comparable sales up 1.4%. Net earnings that quarter were $4.6 billion, or $4.58 per diluted share, against $4.60 per diluted share in the prior year period. On an adjusted basis the comparison point analysts now use is $4.68.
The trajectory going into the print
The first quarter of fiscal 2026 set a cautious tone. Revenue came in at $41.8 billion with comparable sales up 0.6%, a deceleration against the 1.0% posted in the year ago second quarter. Nine of sixteen merchandising departments posted positive comparable sales, which is a majority but not a broad based acceleration.
| Metric | Q1 FY2026 actual | Q2 FY2025 actual | Q2 FY2026 consensus |
|---|---|---|---|
| Net sales | $41.8bn | $45.3bn | about $47.5bn |
| Sales growth (YoY) | not the headline driver | +4.9% | +4.9% |
| Comparable sales | +0.6% | +1.0% (US +1.4%) | guided flat to +2% for the year |
| Diluted EPS | not restated here | $4.58 reported | n/a |
| Adjusted EPS | n/a | $4.68 | $4.71 to $4.73 |
| Gross margin | about 33%, down ~75bps | not restated here | watch for stabilisation |
| Average ticket | +2.2% | n/a | watch mix versus price |
The table makes the central tension visible. Revenue is growing at a healthy mid single digit clip while comparable sales barely move, which means much of the growth is coming from acquired distribution and new capacity rather than from existing stores selling more.
Why the interim office of the chief executive changes this call
On August 12 Home Depot announced that Ted Decker, its chair, president and chief executive, would take a temporary medical leave of absence. The company said it expects him to return within the next few months, while Bloomberg has reported that the leave is expected to last for months rather than weeks.
The interim structure splits the role rather than replacing it. Ann-Marie Campbell, senior executive vice president, oversees day to day operations. Richard McPhail, executive vice president and chief financial officer, oversees financial management and the company’s Pro subsidiaries. Greg Brenneman, the independent lead director, chairs the board during the leave. Our earlier coverage of the Home Depot interim leadership arrangement set out the governance mechanics in detail.
This matters for a specific and practical reason. Guidance is a statement of management conviction, and interim leaders are structurally less likely to make bold forward commitments. The most probable outcome is a reaffirmation of existing full year guidance rather than a raise, even if the quarter itself is solid.
There is a second effect worth naming. With the chief financial officer explicitly holding the Pro subsidiaries brief, commentary on the professional contractor business is likely to be more detailed and more financially framed than usual. That is an unusual opportunity for analysts who have been asking for clearer disclosure on how the Pro strategy is actually converting.
What the first quarter signalled about margins
Gross margin is where tariffs, mix and freight all land at once. In the first quarter Home Depot posted a gross margin near 33%, down roughly 75 basis points against the prior year. Management has framed the pressure as largely a mix effect, with guidance assuming margin improves to roughly flat by the back half of the year.
Why mix matters more than it sounds
Home Depot’s revenue base now includes a large building products distribution arm alongside its retail stores. Distribution businesses typically carry lower gross margins than retail shelves, so growth in that segment mechanically dilutes the blended gross margin even when both businesses are performing well.
That is a benign explanation, and it is probably a large part of the truth. The risk is that a genuinely non benign effect, tariff cost absorption, is sitting inside the same line and is harder to see. Investors will want the second quarter bridge to separate the two clearly.
Ticket versus transactions
In the first quarter average ticket rose 2.2% while big ticket transactions above $1,000 rose only 0.8%. That combination tells a specific story: customers are paying more per basket, but the large discretionary projects that drive home improvement profit are not accelerating.
Big ticket demand is the cleanest read on consumer confidence in this sector. Kitchen remodels, flooring, roofing and HVAC replacement are deferrable, and households defer them when rates are high and confidence is soft. If big ticket growth stays under 1% in the second quarter, the flat to 2% full year comparable sales guidance starts to look top heavy.
Return on invested capital also deserves attention. It fell to 25.4% in the first quarter from 31.3% a year earlier, a decline consistent with a large acquisition being absorbed into the capital base. That is expected mathematically, but the recovery path is a fair question for the call.
How tariffs land on a home improvement retailer
Home improvement retail is unusually tariff exposed because so much of what it sells is physical, heavy and imported: lumber and panel products, tools, appliances, fixtures, hardware, flooring and outdoor equipment. Unlike apparel, these categories are difficult to re source quickly and difficult to shrink through packaging changes.
The Section 338 timing problem
The most consequential detail of this week is a calendar coincidence. On July 20 the administration signed three proclamations invoking Section 338 of the Tariff Act of 1930, imposing an additional 50% ad valorem duty on a long list of Canadian goods, effective August 19, 2026 at 12:01 a.m. Eastern Time. That is one day after Home Depot reports.
The proclamations cover more than 400 tariff classifications across categories including plywood, textiles, furniture parts, paper, plastics, cement and sporting goods. According to the Office of the US Trade Representative, the measures affect close to $20 billion in annual imports from Canada. We covered the full scope in our analysis of the 50% Section 338 duties on Canadian goods.
What is covered and what is not
The exclusions matter as much as the inclusions for this particular retailer. Goods already subject to Section 232 measures are carved out, which covers steel, aluminium, autos and parts, lumber, energy products and potash. Softwood lumber, a major Canadian import line for home improvement, therefore sits under its existing regime rather than the new 50% duty.
Plywood and panel products, however, appear in the annexes. That distinction between raw lumber and engineered panels is subtle, and it is precisely the kind of classification detail that determines whether a category takes a cost hit.
Two further features make these duties harder to absorb than usual. They stack on top of existing duties, taxes and fees unless a specific exemption applies. And USMCA preferential treatment does not exempt qualifying goods, which removes the usual mitigation route for North American sourcing. Goods entering a foreign trade zone must be admitted under Privileged Foreign Status.
| Trade measure | Rate | Effective date | Relevance to home improvement |
|---|---|---|---|
| Section 338 duties on Canadian goods | +50% ad valorem | August 19, 2026 | High: plywood, panels, paper, plastics, furniture parts |
| Section 232 measures (steel, aluminium, lumber, autos) | Existing regime | In force | High: fasteners, appliances, structural materials |
| De minimis suspension on low value parcels | Duty now assessed | Suspended since August 2025, upheld August 2026 | Low direct, high for online tool and parts resellers |
| Section 232 duties on drones and components | 25% and 100% tiers | September 3, 2026 | Low: niche consumer and survey equipment |
The practical consequence is that any tariff guidance offered on August 18 will be stated one day before a material new cost input takes effect. Management can quantify exposure, but it cannot yet report the outcome. That asymmetry is worth remembering when reading the headlines.
How a tariff actually reaches the shelf price
Tariff headlines and tariff earnings effects operate on very different clocks, and the gap explains most of the confusion in retail reporting this year. A duty applies at the moment goods are entered for consumption, not at the moment they are sold. The cost therefore lands in inventory first, and only reaches the income statement when that inventory is sold.
For a retailer carrying roughly a quarter of a year of stock, that means a duty imposed in August typically starts affecting reported gross margin in the fourth quarter, and reaches full run rate the quarter after. A company can be materially exposed and still report clean margins for two consecutive quarters.
This is why forward commentary carries more information than the quarter itself. Home Depot’s second quarter covers a period that ended before the Section 338 duties were even signed into effect, so the reported figures cannot contain them by construction.
Retailers have four levers once a duty lands, and each has a cost. They can absorb it and accept lower margin. They can pass it to the shopper and accept lower volume. They can re source to a different country of origin, which takes quarters and often means qualifying new suppliers. Or they can re engineer the product, which is slowest of all.
Scale changes which levers are available. A retailer of Home Depot’s size can negotiate supplier concessions that smaller competitors cannot, shifting part of the burden upstream. That is a genuine structural advantage in a tariff cycle, and it is one reason large format retailers have generally held margin better than independents through 2025 and 2026.
The complication specific to the Section 338 measures is that the usual mitigation routes are narrower. Because USMCA qualifying goods are not exempt, shifting sourcing within North America does not help. Because the duties stack on existing obligations, they cannot be netted against other measures. Re sourcing outside Canada entirely is the main structural response, and that is a multi quarter project.
The housing market Home Depot is selling into
Home improvement demand tracks housing turnover more closely than it tracks house prices. People renovate when they move, and they move less when borrowing is expensive.
The July data was soft but stable. Existing home sales fell 1.7% month on month to a seasonally adjusted annual rate of 4.05 million units, close to the 4.06 million consensus, and 0.7% above July 2025. Year to date sales are up 2.4%, so the trend is mildly positive rather than deteriorating.
Rates are moving the wrong way
The rate backdrop turned less helpful during the quarter. The average 30 year fixed mortgage rate was 6.54% in July, up from 6.49% in June. Freddie Mac’s survey put the 30 year fixed rate at 6.69% for the week ending August 6, a fifth consecutive weekly increase and the highest level of 2026.
Inventory remains tight at 1.54 million units, down 1.9% from June and 0.6% year on year, while the national median existing home price rose 2.0% to $434,100, a 37th consecutive month of annual gains. NAR chief economist Lawrence Yun has suggested activity could strengthen materially if average mortgage rates move back toward 6%.
The ageing housing stock provides a partial offset that is easy to overlook. A large share of American homes are old enough to require non discretionary repair regardless of interest rates, and roof, plumbing and HVAC replacement cannot be deferred indefinitely. This is precisely the demand that the professional contractor channel serves, which is part of the strategic rationale for the distribution build out.
For Home Depot this is a “low turnover, high equity” market. Households are not moving, but they are sitting on appreciated homes. That configuration historically supports maintenance and repair spending while suppressing large discretionary remodels, which maps closely to the ticket up, big ticket flat pattern in the first quarter.
The Pro strategy and the distribution bet
The strategic centre of gravity at Home Depot has shifted toward the professional contractor. Pro customers spend more, buy more predictably and are less sensitive to consumer confidence than do it yourself shoppers, but they demand delivery, credit terms and jobsite reliability that a retail store alone cannot provide.
SRS Distribution, now a wholly owned subsidiary, is the vehicle for that shift. It distributes roofing and related building products and has continued its own acquisition programme, adding regional distributors to extend geographic coverage. It is the reason total revenue can grow near 5% while comparable store sales grow under 1%.
Management has pointed to a Pro cross sell run rate in the region of $400 million this year, with an ambition to roughly double that next year. Those figures are management framing rather than audited segment disclosure, so they should be read as directional.
The strategic logic is defensible. Professional contractors represent roughly half of home improvement spending in the United States but a smaller share of big box retail revenue, because contractors have historically bought from specialist distributors. Capturing that spend means competing on delivery windows, credit and inventory depth rather than on store experience.
The financial cost of that shift is visible in the numbers already discussed. Lower distribution margins dilute the blended gross margin, and the capital deployed to acquire distribution assets depresses return on invested capital until the assets are fully integrated. Both effects are showing up now, while the revenue benefit is still building.
The question for August 18 is whether that ambition is reaffirmed. A cross sell target that slips would be a meaningful negative signal, because the Pro build out is the main justification for the margin dilution the company is currently absorbing.
How Home Depot and Lowe’s compare this week
The two largest home improvement retailers report within 24 hours of each other, which creates a clean natural experiment. Lowe’s reports on August 19, the day after Home Depot and the same day the Canadian duties take effect.
| Measure | Home Depot (Aug 18) | Lowe’s (Aug 19) |
|---|---|---|
| Consensus revenue | about $47.5bn | $26.18bn |
| Consensus revenue growth | +4.9% | +9.27% |
| Consensus adjusted EPS | $4.71 to $4.73 | $4.24 |
| Implied EPS change | about +0.6% | about -2% |
| Comparable sales guidance | flat to +2% (full year) | flat to +2% (quarter) |
| Recent estimate record | mixed | beats in five consecutive quarters |
| Leadership status | interim office of the CEO | permanent management |
The contrast is instructive. Lowe’s is expected to grow revenue almost twice as fast as Home Depot while its earnings decline, which suggests a more aggressive acquisition and integration phase. Home Depot is expected to grow more slowly but hold earnings roughly flat. Our preview of the Lowe’s second quarter and its Pro strategy covers the other side of that comparison.
If both companies report soft big ticket demand and stable margins, the read is macro: households are deferring projects because of rates. If they diverge sharply, the read is competitive, and the market will reprice both accordingly.
What this means for the rest of retail week
Home Depot opens an unusually dense week of American retail reporting. Target, Lowe’s, TJX and Estée Lauder follow on August 19, with Ross Stores and Walmart on August 20. Because Home Depot reports first, its tariff and consumer commentary sets the interpretive frame for everything after it.
| Date | Company | Segment | Primary question |
|---|---|---|---|
| Tuesday, Aug 18 | Home Depot | Home improvement | Big ticket demand and tariff exposure |
| Wednesday, Aug 19 | Target | General merchandise | Discretionary recovery and margin |
| Wednesday, Aug 19 | Lowe’s | Home improvement | Pro integration and acquisition returns |
| Wednesday, Aug 19 | TJX | Off price apparel | Whether tariffs help or hurt off price sourcing |
| Thursday, Aug 20 | Walmart | Mass and grocery | Trade down behaviour and price investment |
| Thursday, Aug 20 | Ross Stores | Off price apparel | Inventory availability and pricing power |
The macro context was set the week before. Our coverage of the July US retail sales report laid out how back to school demand and tariff costs interacted across categories.
The off price names create a useful cross check on the tariff question. TJX and Ross buy opportunistically from excess inventory, so a tariff environment that leaves other retailers over ordered or mis planned can actually improve their buying conditions. If off price commentary is upbeat while full price retailers describe cost pressure, that divergence is itself evidence about how the duties are propagating.
Walmart’s report on August 20 is the natural counterweight, because it captures grocery and consumables where trade down behaviour appears first. Our Walmart second quarter preview examines how tariff costs are being handled at the low price end of the market.
What counts as a beat, a miss, or a warning
Given the setup, the thresholds are reasonably well defined.
A genuine beat would combine comparable sales above 1.5%, big ticket transaction growth above 2%, and gross margin down less than 50 basis points year on year, with full year guidance maintained or raised. That combination would suggest the consumer is healthier than feared and tariff costs are being managed.
An in line quarter would show comparable sales between 0.5% and 1.5%, adjusted EPS within a few cents of $4.71, and reaffirmed guidance with cautious tariff language. This is the most likely outcome and would probably produce a muted share reaction.
A warning would look different. Comparable sales below 0.5%, big ticket transactions flat or negative, gross margin down more than 75 basis points again, and any softening of the flat to 2% full year comparable sales range would be read as the back half recovery failing to materialise. Because guidance assumed margin recovery in the second half, a reiteration of first quarter margin pressure is the single most dangerous data point in this report.
Valuation context sharpens the risk. The shares traded around $355 in early August, down roughly 8% on a total return basis over the preceding year while the S&P 500 gained double digits. Street consensus price targets have clustered near $370, implying limited expected upside. A stock that has already de rated has less room to absorb a guidance cut but also less froth to lose on an in line print.
What to listen for on the call
Five things are worth isolating from the prepared remarks.
First, whether the interim leadership reaffirms the full year outlook explicitly rather than describing it in general terms. Second, whether the gross margin bridge separates acquisition mix from tariff cost, because conflating them obscures the real trend.
Third, any quantified statement of Canadian sourcing exposure ahead of the August 19 duties, including which categories sit inside the Section 338 annexes. Fourth, whether the Pro cross sell ambition is repeated with the same numbers. Fifth, any commentary on how the company is planning inventory and pricing for the autumn and holiday period.
Analysts should also watch for what is not said. Interim management operating during a medical leave has an incentive to avoid new strategic commitments, so an absence of forward detail is informative rather than neutral.
FAQ: Home Depot second quarter questions
When exactly does Home Depot report second quarter fiscal 2026 results?
Home Depot reports on Tuesday, August 18, 2026, before the US market opens, with a management conference call and webcast following the release.
What are analysts expecting for earnings and revenue?
Consensus estimates cluster around adjusted earnings of $4.71 to $4.73 per share on revenue of roughly $47 billion to $47.5 billion. That implies about 4.9% revenue growth and roughly 0.6% earnings growth against the year ago quarter.
Who is running Home Depot during Ted Decker’s medical leave?
Ann-Marie Campbell, senior executive vice president, oversees day to day operations. Richard McPhail, executive vice president and chief financial officer, oversees financial management and the Pro subsidiaries. Greg Brenneman, independent lead director, chairs the board. The company has said it expects Decker to return within a few months.
How do the new Canadian tariffs affect Home Depot?
Section 338 duties of 50% on more than 400 Canadian tariff classifications take effect on August 19, 2026, one day after the report. Plywood, panel products, paper, plastics and furniture parts are in scope. Softwood lumber, steel and aluminium remain under existing Section 232 measures and are carved out of the new duty.
Why is revenue growing faster than comparable sales?
Much of Home Depot’s growth now comes from its building products distribution business serving professional contractors rather than from existing stores. Distribution revenue counts toward total sales but not toward comparable store sales, which is why the two figures have diverged.
What is the single most important number in this report?
Gross margin. Full year guidance assumes margin recovers to roughly flat in the back half after falling about 75 basis points in the first quarter. If that recovery is not visible, the earnings guidance behind it becomes difficult to sustain.
How does the housing market affect these results?
Home improvement demand follows housing turnover. July existing home sales ran at a 4.05 million annualised rate, down 1.7% month on month, with 30 year mortgage rates near 6.69% in early August. Low turnover suppresses large remodel projects while supporting repair and maintenance spending.
Should Home Depot and Lowe’s results be read together?
Yes. They report within 24 hours of each other into the same macro conditions. Similar results point to a demand driven explanation, while sharp divergence points to company specific execution or competitive share shift.
What would make the market treat this as a bad quarter?
Comparable sales below 0.5%, flat or negative big ticket transactions, a second consecutive quarter of gross margin down more than 75 basis points, or any narrowing of the flat to 2% full year comparable sales guidance.