Home Depot (NYSE: HD) beat expectations in its fiscal second quarter. Revenue hit $47.9 billion and adjusted diluted EPS reached $4.92, topping consensus estimates of $47.3 billion and $4.73. The 5.7% top-line gain and 5.1% adjusted EPS growth versus last year show a consumer still spending on home improvement, just in smaller increments.
Comparable sales rose 1.7%, with U.S. comps up 1.3%. The composition matters more than the aggregate. Average ticket climbed 2.8% to $92.50, while customer transactions slipped 1.0%. Higher spend per visit, fewer visits. This pattern suggests customers are consolidating trips and buying slightly more per stop, a focus on maintenance and minor upgrades rather than large-scale renovations.
Gross margin expanded 30 basis points to 33.7% from 33.4% a year ago, lifting gross profit 6.5%. The improvement came even as cost-of-sales rose 5.3%, roughly in line with revenue. Operating expenses grew faster, with SG&A up 8.5% to $8.4 billion. That pushed GAAP operating margin down to 14.3% from 14.5%. Adjusted operating margin held at 14.7% versus 14.8%, a 10bp erosion reflecting the SG&A leverage challenge.
Management held full-year guidance steady: total sales growth of 2.5%–4.5%, comparable sales growth of flat to 2.0%, and adjusted EPS growth of flat to 4.0%. Holding guidance after a beat is the most telling signal in the release. It implies management sees Q2 as within the expected range, not the start of an acceleration. The guidance includes IEEPA tariff refunds expected to partially offset unplanned fuel, energy, and other product input costs. Cost headwinds remain.
The beat was broad-based, according to CFO Richard McPhail, who cited demand across the business driven by smaller projects. This fits the comp data. Customers are showing up, but not for the big-ticket kitchen-and-bath remodels that drive higher transaction counts. The 1.0% decline in transactions, while modest, marks the second consecutive quarter of negative traffic. Home Depot is growing revenue by extracting more dollars per visit, not by getting more people through the door.
Adjusted diluted EPS of $4.92 excludes $0.18 per share of acquired intangible asset amortization, largely tied to the SRS Distribution acquisition. The GAAP figure of $4.79 still grew 4.6% year over year. The $0.13 gap between GAAP and adjusted EPS is consistent with prior quarters.
For the six-month period, revenue rose 5.3% to $89.6 billion, while adjusted EPS grew just 1.3% to $8.35. This first-half trajectory means hitting the upper end of the full-year adjusted EPS growth guidance (flat to 4.0%) will require a stronger second half. With guidance unchanged, the burden is on Q3 and Q4 to deliver acceleration, or for cost pressures to ease more than management expects.
What to watch next: the trajectory of transactions. If average ticket continues to rise while traffic remains negative, Home Depot is relying on price and mix, not volume. That works in a stable demand environment but leaves the company exposed if consumers pull back further on discretionary spend. The guidance hold suggests management is comfortable with the current setup. It also leaves no room for error in the back half.