If you own a home, chances are, you’ve spent a decent amount of time inside a Home Depot.
You’ve probably roamed the massive aisles, approached a friendly employee in an orange apron for help, and questioned whether you were buying the right supplies as you swiped your credit card at checkout.
As essential a retailer as Home Depot is, the company has been struggling as of late.
In its most recent earnings report, Home Depot revealed that comparable U.S. sales only increased by 0.1% on a year-over-year basis, missing expectations by a long shot.
“We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand,” said Ted Decker, chair, president, and CEO.
And that’s not all. Foot traffic at Home Depot fell 0.4% year over year during the quarter, according to data from Placer.ai. And unfortunately, things could get worse before they get better.
Image source: Shutterstock
Home Depot issues follow-up warning on soft sales
On Dec. 9, Home Depot updated its preliminary guidance for the upcoming fiscal year. And its outlook didn’t exactly reek of positivity.
In fact, based on its cautious guidance, it’s clear that Home Depot does not anticipate that the housing market will rebound in the short term. It’s also pretty clear that Home Depot doesn’t have high hopes for the economy as a whole.
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Home Depot’s latest projections for fiscal 2026
- Comparable sales growth of approximately flat to 2%
- Diluted earnings-per-share to increase approximately flat to 4%
- Adjusted diluted earnings-per-share to increase approximately flat to 4%
- Total sales growth of approximately 2.5% to 4.5%
Source: Home Depot
Home Depot’s less-than-stellar outlook can be attributed to a housing market that’s been next to impossible for new buyers to break into. That, coupled with elevated interest rates and a questionable economy, has forced more consumers to put off major home improvement projects, leading to sluggish sales.
“Looking forward to 2026, we anticipate these pressures will persist, as we have not yet seen a catalyst for an inflection in housing activity,” said Chief Financial Officer Richard McPhail at the company’s investor event in New York.
Home Depot guidance reeks of economic concerns
Although falling interest rates are expected to open up the housing market to some degree, and mortgage rates are lower now than they were a year ago, things aren’t looking rosy for Home Depot.
The fact of the matter is that housing prices and interest rates aren’t the only factors driving Americans’ spending decisions.
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Inflation has been an absolute beast, and most recently, it was up 3% on an annual basis, according to September’s Consumer Price Index.
American consumers, meanwhile, have been forced to change their spending patterns to cope with higher costs. And if stubborn inflation continues into 2026, it could end up being yet another sluggish year for Home Depot.
But reading between the lines, Home Depot doesn’t just seem to be sounding a warning on its own financial prospects. Rather, the company’s guidance seems overwhelmingly skewed toward a scenario where U.S. consumers continue to spend cautiously and tighten their belts.
Those patterns could trickle down to all of retail and the broad economy, fueling an uptick in unemployment.
Home Depot, meanwhile, says it’s ready to pivot toward longer-term strategies to ensure its success. And that’s a good thing.
But if the country’s largest home improvement retailer is bracing for slow sales in 2026, it’s a sign that the economy may be headed into troubling territory.
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