The Home Depot is leaning on new artificial intelligence tools for professional contractors and computer-vision systems in its stores as weaker home-improvement demand, rising consumer uncertainty and a lack of storms weighed on third-quarter results.
The company reported third-quarter sales of $41.4 billion, up 2.8% from a year earlier, with comparable sales up 0.2%. U.S. comps rose 0.1%.
“Our results missed our expectations primarily due to the lack of storms in the third quarter,” CEO Ted Decker told analysts. He added that “consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand.”
Executives said the underlying demand profile was unchanged from the prior quarter once weather effects are stripped out. “If you adjust for the storm activity, our Q3 comp, the underlying business comp, was essentially the exact same as Q2,” Decker said. “Call that underlying business to be about a 1% comp in each of Q2 and Q3.”
AI Blueprint Takeoffs for Pros
Home Depot is accelerating its tech investments in the Pro segment, highlighted by a new AI-powered material estimation tool.
Ann-Marie Campbell, senior executive vice president of U.S. stores and operations, said the company recently deployed “a new project planning tool that we launched in September” and a second capability called Blueprint Takeoffs.
“This new tool leverages advanced AI and proprietary algorithms to deliver accurate blueprint takeoffs and material estimates in record time,” Campbell said. She emphasized the operational benefit for contractors: “This technology replaces a manual intensive process that took weeks to complete increasing accuracy and reliability.”
Campbell said the tools are designed to simplify end-to-end planning for larger jobs. “Pros can then quickly and easily purchase all materials they need for their project through The Home Depot, simplifying this complex process by going through a single supplier.”
Computer Vision Reaches “Record” In-Stock Levels
Campbell also described gains from store-level automation, including freight-flow software and on-shelf visibility tools.
She said the company “continue[s] to focus on-shelf availability and through computer vision and Sidekick we have reached record in-stock and on-shelf availability levels.” She added that faster fulfillment initiatives leveraging both stores and distribution centers “have driven an over 400 basis point increase in our customer satisfaction scores.”
Digital Sales Up 11%
Digital engagement continued to strengthen. Executive vice president of merchandising Billy Bastek said, “Sales leveraging our digital platforms increased approximately 11% compared to the third quarter of last year.”
He added that Home Depot’s delivery improvements are driving incremental engagement: “We know that as we remove friction from the experience, we see incremental customer engagement, leading to greater sales across all points of interaction.”
Outlook Reduced for Fiscal 2025
CFO Richard McPhail said total sales include “approximately $900 million from the recent acquisition of GMS” and reiterated that Canada and Mexico posted positive comps in local currency.
Home Depot now expects approximately 3% total sales growth for fiscal 2025, with GMS contributing about $2 billion. But earnings expectations were lowered. The company now forecasts a 5% decline in adjusted diluted EPS compared with fiscal 2024 on a comparable 52-week basis.
McPhail said the guide reflects softer Q3 results, continued storm-related pressure in Q4 and the integration of GMS. “You add those together and get your revision to the fiscal year guide,” he said.
He reaffirmed that the company continues to invest at the same pace: “We plan to continue investing in our business with capital expenditures of approximately 2.5% of sales for fiscal 2025.”
Consumer Caution Remains a Wildcard
Decker said the company does not yet see a catalyst for improving demand: “We just don’t see the catalyst to increase that underlying storm adjusted demand in the market.”
Despite macro pressure, he said Home Depot believes it is gaining share. “I believe we took share in Q3, and year-to-date this year, and [will] do the same thing in Q4.”
Executives plan to expand on their strategic priorities, including advanced tools for Pro customers, at the company’s investor conference on Dec. 9. Decker told analysts.
