Home Depot to add 13 stores in 2025, sees growth despite uncertain economy

The company is expanding “by investing in new stores in areas that have experienced population growth or where it makes sense to relieve pressure on existing high-volume stores,” Home Depot CEO Ted Decker said during a Tuesday conference call.

Home Depot’s net sales were up 4.5% year over year for its 2024 fiscal year, which ended earlier this month. The company saw about $220 million in sales from recovery efforts after hurricanes Helene and Milton last year, and has also been contributing to recovery from the Southern California wildfires in January, including funding, volunteers, emergency grants and donations of water, masks and supplies.

But its profit for the year was down 2.2% to $14.8 billion, from $15.1 billion a year earlier.

The company’s expenses grew faster than its sales, as it added stores and saw operating expenses increase 8.6%. Home Depot also in 2024 invested in its largest acquisition ever, buying Texas-based roofing and building supply distributor SRS Distribution for $18.3 billion.

Meanwhile, high interest rates that make borrowing more expensive for large projects like kitchen and bathroom remodels are affecting demand in the home improvement market, according to the company.

Progress in fourth quarter

Same-store sales, which reflect sales at stores that have been open at least a year, had been declining for the last couple of years. Its same-store sales declined 1.8% in 2024 compared with 2023.

But the company saw some positive progress in its fourth quarter results, with same-store sales increasing 0.8%.

“Throughout the year, we remained steadfast in our investments across our strategic initiatives to position ourselves for continued success, despite uncertain macroeconomic conditions and a higher interest rate environment that impacted home improvement demand,” Decker said in a written statement.

Fourth quarter profit grew to $3 billion, from $2.8 billion in the year-ago quarter.

And quarterly sales grew 14.1% to $39.7 billion, boosted by an extra week in the quarter compared with last year.

Looking forward, with the continued expansion of stores and benefits from the SRS acquisition, Home Depot forecasts that its total sales will grow 2.8%.

A key part of the company’s strategy is to increase its market share from professional contractors, with the help of SRS’ customer base. SRS contributed more than $6 billion in sales to Home Depot in seven months.

The company is also preparing to manage through new tariffs. President Donald Trump has enacted or threatened import taxes on many U.S. trade partners, and those costs are generally passed along to the end buyers of products.

“We’ve been focusing on diversifying sourcing for several years,” said Billy Bastek, Home Depot’s executive vice president of merchandising. “With our scale, we feel that we’re as well or better positioned than anyone in the marketplace to navigate the environment going forward.”

The company expects to see same-store sales grow 1% in fiscal year 2025. However, it forecasts a 3% decline in its diluted earnings per share, a measure of profitability.

“While there are signs that the home improvement market is on the way towards normalization, uncertainty still remains,” said Chief Financial Officer Richard McPhail.

“We expect the underlying momentum in the business that we saw in the back half of 2024 to continue into 2025,” he said. “However, we are not assuming any meaningful changes to the macroeconomic environment.”

Decker said he isn’t expecting any significant increases in the rate of new housing construction. But, he said homeowners have built up significant home equity, which he expects they’ll tap into for renovations.

“If they’re staying in their homes longer, they will take on larger remodeling projects, as opposed to moving,” Decker said, particularly for those locked into lower interest rates on their mortgages. “As homes continue to age and people are staying in those homes, and realize that we’re highly unlikely to see the low interest rates we saw over the past two or three years, they’ll eventually tap that equity and do the larger remodeling projects.”

“We’re just not sure that turn comes in 2025 at a dramatically accelerated pace,” he said.