Home Depot swings to profit, boosted by consumer spending on small projects

Home Depot said its second-quarter results beat expectations as customers pursued smaller home improvement projects.

The Vinings-based home improvement giant reported net sales of $47.9 billion for the quarter, up 5.7% from the same period last year. But the company said its cost of sales grew 5.3% from the same period last year.

Home Depot said its net income increased to nearly $4.8 billion in the second quarter, up 4.7% from last year. That’s a reversal from last quarter when its profit dipped.

Home Depot is an economic bellwether and its financial results are closely watched as a gauge of consumer spending and the housing market, both of which remain under pressure.

Higher interest rates and inflation are discouraging homeowners from taking on larger renovation projects or trading up for newer homes, which opens inventory for would-be buyers.

Richard McPhail, Home Depot’s chief financial officer, told CNBC Tuesday that the company continues to operate in “frozen housing market” conditions. Elevated mortgage rates and affordability issues have kept potential homebuyers mostly on the sidelines this year.

But Home Depot has spent billions to gain more wallet share from professional contractors, and this quarter the company reported strength in categories such as decking, pipe and fittings, fasteners, hand tools and concrete.

Spring-related categories — such as live goods, mulch, patio and grills — were strong for do-it-yourself customers, Home Depot added.

McPhail is one of the two executives filling in for Home Depot Chairman and CEO Ted Decker, who is on a temporary medical leave of absence, the company said last week.

Ann-Marie Campbell, senior executive vice president of U.S. stores and operations, is overseeing Home Depot’s day-to-day operations, while McPhail is leading the company’s financial management and its professional contractor subsidiaries.

Home Depot’s second-quarter results beat Wall Street expectations, and the company maintained its full-year guidance, including forecast sales growth of 2.5% to 4.5%.

The company said it is including tariff refunds in its guidance, which it expects to “partially offset unplanned fuel, energy and other product input costs throughout the fiscal year.”

Earlier this year, the Supreme Court ruled it was illegal for President Donald Trump to impose certain tariffs under the International Emergency Economic Powers Act without congressional approval.

The U.S. Customs and Border Protection launched a portal for companies to apply for tariff refunds. So far, the federal government has refunded more than $100 billion to corporate importers.