Home Depot Lowers Fiscal 2026 Forecast, Shares Dip Ahead of Investor Day

The giant home improvement retailer, Home Depot (NYSE: HD), painted a cautiously conservative picture for fiscal 2026. The company revealed forecasts for comparable sales growth and earnings that fall short of Wall Street consensus, shaking some confidence ahead of its first investor day in over two years.

Shares of Home Depot slipped about 2% in premarket Tuesday, reflecting investor reaction to the lowered guidance. Specifically, the company expects same-store sales to gain only between 0% and 2%, notably below the 2.34% analysts had predicted. Adjusted EPS growth forecast hovers between flat and 4%, trailing the estimated 5.6% growth market watchers had anticipated.

Demand for DIY projects and pricier home goods appears to be cooling off. The broader U.S. housing market struggles with rising unemployment rates, steep home prices, and elevated borrowing costs, factors which have stifled renovation frenzy. Even a modest decline in mortgage rates isn't translating into a rebound just yet.

TD Cowen analysts described Home Depot's new forecast as a "reasonable starting point," hinting that conditions might improve once housing momentum picks up and large renovations regain traction. Despite the cautious short-term outlook, company execs maintain a somewhat optimistic tone.

Finance chief Richard McPhail expressed confidence that Home Depot will outpace overall market growth next year. He noted his expectation that the pressures bearing down on housing will eventually ease-offering a shot in the arm for consumer home improvement spending ahead of the wider economic recovery.

Home Depot employs roughly 470,000 workers across more than 2,300 stores and over 1,200 specialty retail services nationwide, underscoring its reach in the sector. Yet even with this scale, the share price has declined nearly 10% this year, contrasting with a 16% rise in the S&P 500.

Under Pressure From Sector Rivals:

The story isn't unique to Home Depot. Competitor Lowe's (NYSE: LOW) is also feeling the pinch as consumers pull back on expensive upgrades. The persistent reluctance among buyers to commit to big-ticket home projects is reshaping demand curves for both retail giants.

With no immediate turnaround visible in U.S. housing trends, the pressure will likely continue to weigh on retail sales and profits for home improvement stores. Still, the company hopes its dominant market position and broad footprint will buffer some of the volatility until the sector stabilizes.

For now, Home Depot's tempered guidance offers a reality check on the challenges facing retail sectors tied closely to housing. Whether conditions improve enough to revive momentum in the near future remains an open question.