Home Depot at Goldman Sachs Conference: Strategic Growth and Challenges

On Wednesday, 03 September 2025, Home Depot (NYSE:HD) participated in the Goldman Sachs 32nd Annual Global Retailing Conference, presenting a strategic overview marked by positive business momentum and key challenges. The company highlighted a shift from negative to positive comparable sales in the third quarter, driven by a healthy consumer base and strategic investments. However, tariff impacts and pricing pressures remain areas of concern.

Key Takeaways

• Home Depot reported positive comp sales growth for the third consecutive quarter.
• Strategic acquisitions and supply chain investments are enhancing market share and delivery capabilities.
• The company is focused on expanding pro capabilities to capture a $250 billion opportunity.
• Tariff impacts are being managed to protect project costs for customers.
• A better economic environment is expected in the second half of 2025 due to tax cuts.

Financial Results

• Positive comp sales growth was reported for the third consecutive quarter, with broad-based growth across geographies and merchandise departments.
• U.S. comp sales grew by 1.4%, with 13 out of 16 departments showing positive results.
• Online sales saw a 12% increase, reflecting accelerated growth in digital platforms.

Operational Updates

Tariffs and Pricing:

• Home Depot is addressing tariff changes, with over 50% of goods manufactured in the U.S. and not tariff-related.
• The company is diversifying supplier strategies to mitigate pricing impacts and protect project costs.

Supply Chain:

• Investments in digital assets and supply chain improvements are enhancing delivery speed and customer engagement.
• More than 20 distribution centers enable coverage of 90% of the population in two days or less.
• Strategic inventory investments are supporting same-day and next-day delivery capabilities.

Pro Capabilities:

• Home Depot is building out pro capabilities to address a $250 billion white space in customer share of wallet.
• The focus is on organic growth, with M&A serving as an accelerator.
• Recent acquisitions, such as SRS and GMS, are being integrated to provide comprehensive services.

Future Outlook

• The company expects a favorable environment in the second half of 2025, driven by tax cuts.
• Capital allocation priorities include investing in core business, paying dividends, and resuming share buybacks once leverage targets are met.
• Continued focus on organic growth and strategic mergers is expected to drive future success.

Q&A Highlights

Consumer Health:

• The consumer remains healthy, with the average homeowner benefiting from home price appreciation.
• Economic uncertainty is noted as a factor preventing engagement with larger projects.

Online Business:

• Online business growth is accelerating due to improved speed and delivery, with increased repeat purchases.

Inventory:

• Investments in supply chain assets continue, with no forward purchases related to tariffs.

For more detailed insights, readers are encouraged to refer to the full conference call transcript.

Full transcript - Goldman Sachs 32nd Annual Global Retailing Conference 2025:

Unidentified speaker: Morning. Morning. Alright. Kate, nice to see you.

Kate: Yeah, long time no see. Yeah. You so much for joining us today. Hi, everybody. Thanks for joining us for our fireside chat with Home Depot.

We’re happy to have with us Ted Decker, Chairman, President, and Chief Executive Officer and Billy Bastik, Executive Vice President of Merchandising. Thank you so much for joining us today. I think it’s pretty much on everyone’s minds. There’s two buckets of questions I think that we get asked the most about when it comes to Home Depot. And maybe we can start with the first, which is just the health of The U.

S. Consumer, your outlook for housing. I think it’s fair to say that it seems like there was a little more momentum in the business in the second quarter. You saw a broader swath of growth than you’ve seen in some time. So maybe we can start there and you can talk about what you’re seeing from the consumer and why now and

Ted Decker, Chairman, President, and Chief Executive Officer, Home Depot: what you expect? Well, feel much better than we did last year, Kate. So when we were here last year, we were entering, I think it was our eighth quarter of negative comps. And now sitting here today, we just wrapped up Q2, third quarter positive comps in the state. So there definitely has been a momentum switch that started in the back half of last year and continued into the full 2025.

And it’s really broad based. Short of the large project that tends to be financed, the engagement in smaller projects and repair projects is as broad based as it’s been in several years now frankly in terms of geographies, in terms of merch departments, which Billy can hit on the number of departments that we’ve seen positive traction. So our consumer has been healthy throughout these past couple of years even in terms of our average homeowner is sort of squarely in that fourth quintile of median economic income, participating in home price appreciation, which has gone up 50 odd percent since the end of ’nineteen. While we are not seeing national price increases to the extent we had the prior years, Nationally, home prices are still increasing. That’s because of a fundamental shortage of homes.

We have a supply and demand imbalance. People feel good in terms of equity returns. So we have an employed healthy core customer who is now starting to reengage in home improvement. Housing hasn’t been particularly helpful. So you asked about the housing market.

Some people are saying it’s close to frozen in some of the numbers would suggest with forty year lows of housing turnover. Mentioned the fundamental shortage of housing. We are barely building enough new homes to keep up with current household formations. So we are not really making a dent in the shortage of housing. And then there has just been a lot of economic uncertainty that we think is preventing people from taking out a HELOC or cash out refi their home.

They have a tremendous amount of equity in the home. We’ve never seen more untapped equity, but with just is there going to be a recession? What’s going to happen to my tax rates? What’s going to happen with general inflation because of tariffs? All these things have been so noisy in the everyday media, not just financial media.

People have cited that as the number one reason that they haven’t engaged with big projects. But we think that will come. That’s a matter of time getting used to the rates, whether they come down dramatically or not with what people anticipate is Fed cuts on the horizon. We need to get turnover up. That would be nice to get off forty year lows, but all things being equal, feel much better sitting here with you this year than a year ago.

And Billy, you can talk about the breadth?

Billy Bastik, Executive Vice President of Merchandising, Home Depot: Yes. And then as you mentioned, Kate, you said about our Q2 call, we did see the broadest base of kind of across our store impact. If you look at our top 20 categories that made up essentially the 1.4 U. S. Comp we had, we had 13 of 16 departments in The U.

S. Positive comp. And only 5.4 of those categories were seasonally related. We know we had a different type of spring as we seem to every year, certainly here in the North, but it was really less of an impact to spring finally came in much more broad based. I call it the middle of the store, concrete, dimensional lumber, water heaters, a lot of businesses like that, vanities, stuff on the smaller project piece, but really pleased.

The first time going back to, I think, the back ’2, we saw that kind of broad based impact across the business in a very positive way.

Ted Decker, Chairman, President, and Chief Executive Officer, Home Depot: And I’d also say, Kate, our growth in addition to I think a more supportive environment, we continue to take share. So we’re taking share with the consumer part of our business and the pro part of the business. So all the things we’re doing to build out pro capabilities are resonating with our pro customers. And then we’re half the business, the market is still that consumer DIY and we’re doing a tremendous amount terms of delivery, our digital platforms, marketing to continue engaging with that consumer and we are growing in virtually every category faster than the marketplace. So we would love the customers responding to the capabilities and service levels we’re putting into the marketplace.

Kate: That’s great. Yes, it’s definitely a different tone than it was last year. So it’s great to hear. But the other thing that’s maybe a little bit different from last year is tariffs. And Billy, you had talked again on the quarterly call just that we should not expect to see broad based price increases on your product.

Can you walk through a little bit how you’ve been able to manage this? Half your business is out or imports are outside The U. S. So how has the supply chain functioned in this very volatile environment? How has the merchandising team operated?

And how where has the mitigation come from?

Billy Bastik, Executive Vice President of Merchandising, Home Depot: Yes. So you’re right. Things certainly have changed on the tariff front since we were a year ago. And even candidly back to Q1, we made some I made some comments during our Q1 call that based on that point in time and the rates then, we were very comfortable that we could mitigate virtually all that cost. And I said as much, obviously, things have changed over the course of the last ninety days policy changes.

So, listen, we said on the call, prices will move. There’s no question about it. But if you step back, more than 50% of our goods are manufactured in The U. S. Are not associated with anything tariff related.

So we feel great about that. We feel great about the diversification strategies that we’ve had in play for several years with our supplier partners outside of certain geographies and feel great about our diversification as it relates to the different countries and even continents where products are manufactured. We have a great pricing finance team. We work closely with our suppliers. Our number one piece, as we said on the call, is going to continue to be we’re a project retailer.

We’re going to continue to keep that project the least amount of impact we can have projects. And the team is solely focused on that. We have a really great line of sight to what the impacts are financially. We have a number of levers we can use. And so while prices will move, we’re going to be laser focused on creating the best value for our customers.

Protecting the project is going to be a real key to us in the back half of the year. And we think we’ll continue to manage that the way we have. We’ll see more in the back half of the year based on when the changes were made to policies and now that subsequent inventory coming in. But we have all of our inventory in house already as it relates to the back half of the year. Think of our big events, holiday and some of the stuff we do in Tools.

So we feel great about that position and how we’ll manage that going forward and really going to protect the project is a key piece to us. There are key items and key indicators and key pieces of those projects that we are laser focused on ensuring that pricing is going to be as competitive as it’s always been. And we love our shelf price every day. We’ll continue to protect that project at all costs.

Kate: And then could you just maybe talk to assortment then, assortment planning in the context of this environment? You’re protecting the project, so I would imagine you’re not compromising the assortment there as much. But maybe for holiday or Halloween or more of the discretionary occasions, have you had to work through that assortment a little bit differently? Yes.

Billy Bastik, Executive Vice President of Merchandising, Home Depot: Think the holiday things you referenced, that’s even a little bit While that’s discretionary, yes, that’s more of a onetime sort of impact. We spend a lot of time again, this was a moving set of circumstances throughout the spring. And specifically to Q4, you’re planning that in that time frame. So we are thrilled that we’ll have a very competitive holiday program. We know that price price impression there is important.

Our customers see us in that space specifically. So there’s a lot of good understanding about what prices have been historically. We feel great about our position as it relates to the holiday pieces specifically, both Halloween, holiday and then our Q4 more tools business. I’d say more broadly across assortment and line structure is depending on the tariff impact, and we’ve talked about this many times, there will be items that just don’t make sense in the line structure. If you’ve taken certain costs associated with these products and now they’re sitting on top of other projects, just by definition, they’re not going to make sense from an assortment standpoint.

So, we’ve seen some rationalization of that because prices that haven’t been impacted, costs that haven’t been impacted end up in a different place in the line structure just don’t make sense going forward. There’s really no demand for it out there. It’s really the impact. So, the merchants are head downs. That’s their only job right now among the five other things they’re doing is really going bay by bay, SKU by SKU, assortment by assortment and seeing where if a retail has ultimately moved, this is going to be an impact to that product, meaning it doesn’t fit in the line structure anymore.

We’ve made a number of changes through that process, and the teams continue to work through that in the back half of the year.

Kate: Okay. So that was the kind of the first bucket of questions we get, the macro and tariff. The second is about the Complex Pro. And there are a couple of different directions we can go with this, but maybe we could start with capital allocation. You have a long history now of making acquisitions.

You’ve always been very consistent with these acquisitions and acquiring companies that can help you build out capabilities, HD Supply and Interline, for example, and the MRO space and now more recently, SRS and GMS. So could you maybe talk about how you’re viewing your acquisition strategy going forward and in the context of your capital allocation priorities?

Ted Decker, Chairman, President, and Chief Executive Officer, Home Depot: Sure. So capital allocation, Kate, hasn’t fundamentally changed. We will always invest in the core business, the core retail business in the 2,350 stores that we have. Will always pay a healthy dividend and then in the past when we had excess cash after those demands we would buy back shares. That’s still the play in capital allocation, but one of the things we have done as you said in the last couple of years is part of growing the core particularly our pro capabilities we made two decent sized acquisitions.

And because we have a pretty conservative outlook on leverage, we said that we would suspend buybacks until we got our leverage back down to our more or less to our target of two times. So that pushes out buybacks just on our cash flow forecast into the ’6. But all things being equal, we will continue with the capital allocation play to invest in the core, which would include some acquisitions, pay the dividend and buy back shares. So as we build out our capabilities, which we’ve been doing to get more share of wallet with our existing core customer base, those organic efforts of building out a field sales force, delivery capabilities, leveraging our balance sheet to provide trade credit, order management, account management, all those activities continue at a pace. Those haven’t changed at all.

In fact, they’ve been accelerated in somewhat. SRS, for example, has a very robust trade credit practice. It’s what they’ve always done. So they’re running Home Depot’s trade credit rather than us build that capability. GMS as a drywall and ceiling distributor, very similar sort of set of capabilities, branch based delivery, boom and scatter, distribution assets, very similar operating model and culture.

We just thought that was a great fit. The GMS team and the SRS team have known each other for years and as well as SRS was going, it just made sense to engage GMS and they were super open to the prospect of not just joining Home Depot, but joining the SRS platform. So GMS will be rolled in as two more verticals of ceiling and drywall into SRS. That management team happily, the operating team is staying and the sales force team is staying and they will report into the SRS team. And we’ll continue to look at opportunities from an M and A perspective.

One thing that can I assure you we’ll do, it’s very normal with distribution that you would have roll up or bolt on smaller acquisitions? SRS, for example, in the year we’ve owned them, year plus we’ve owned them, they’ve done 10 odd bolt ons. These can be one branch outfits in a new town that we might not have a presence or in a different part of a town that we don’t have a presence. So we always look at the cost benefit analysis of greenfielding a new site versus acquiring an operation that has a robust customer base. So we will continue with and these are very modest in the scheme of things acquisitions.

Whether we do anything at scale anytime soon, we’ll continue to review that. But the main focus is to continue to build out the organic opportunities and then merge cross selling capabilities and cross distribution capabilities with SRS and GMS.

Kate: And this question has come up before, but in terms of where you are with the complex pro initiative and strategy, do you feel like you’re in a place where you have the right platform now given these acquisitions?

Ted Decker, Chairman, President, and Chief Executive Officer, Home Depot: Yes. It will always continue to develop. But yes, I think if things were to stay where they are right now, we have a great set of capabilities and a great set of acquired assets and built assets. When we first went on this journey, we said the TAM is about $1,000,000,000,000 and it’s evenly split between the pro customer and the DIY customer. Our Home Depot business is equally split about fifty-fifty, the pro and the consumer.

What we always knew was with the pro customer, depending on the size and the complexity of their project, we were either getting the vast majority share of their spend. So smaller pro might be giving 100% of their spend to the home center channel or thankfully Home Depot, but the larger pro would be spending their principal purchases with wholesale distribution. While they shopped Home Depot, they might have a $2,000,000 spend and Home Depot might get $50,000 $75,000 that was for emergency fill and pick up or obviously open late at night and weekends, but their principal purchases were with distribution. And what we said is when we have the product, we are in your geographies and you are already shopping with us, why would you spend more with us and they all love Home Depot thankfully. They are like yes, we love your brand, we love your product, we love the brands you sell, but you need to develop these capabilities to get that share of wallet.

I mean we are not going to pay for a window package on a Visa card three months before it’s delivered. That’s not how we operate our business and we are not going to come and pick up a truckload of shingles. Those have to be delivered to the job site. So we set about to build the capabilities to capture more share of wallet with that customer. And we’re not just getting the share of wallet because we’ve entered the game, we have to offer value to them.

And the value we’re offering is we can simplify their business, Turn times and cycle times is the principal profit engine for our pros, a remodeler, a builder, large builder, small builder, how quickly can I get this project done? That is where they make their money and how many projects can I turn? So the value proposition is, hey, we have the product, we have the brands you want, you’d like the Home Depot offering as we build out these capabilities and you can consolidate the number of people that you have to work with on a project, we can bring digital tools, technology, fewer points of contract and speed up that cycle time of your build, do we have a right to win more share of your spend? And they said absolutely and we’ve worked with them on what those capabilities need to be, what they need to look like, put them in place in front of the customer, test them and modify. So the organic efforts remain the most important.

I think it’s a $250,000,000,000 white space for existing customers’ share of wallet as we build out these capabilities. And M and A is an accelerator to that effort, but not necessary. And certainly from where we are today, we’re in great shape and we’ll look at opportunities always on a case by case basis.

Kate: If I can maybe just pivot a little bit to some of the investments that you’ve made. And I think what, again, came across on the second quarter call is some of the benefits or lift you’re seeing as a result of your investments in speeding up the supply chain. I know it’s something the company is excited about. There a way you can quantify what lift you’re seeing from this increased speed and how important it is to, again, just taking more share?

Ted Decker, Chairman, President, and Chief Executive Officer, Home Depot: Yes. I think and Billy, please add. I it’s clear that of all the capabilities that the pro and the consumer is looking for is speed. They certainly want a great product at great value, but delivery and then speed of delivery is increasingly the battleground. So some time ago, we made a number of investments to improve our digital assets.

We rebuilt our entire digital platform and put all that up in the cloud. And we started to build out a supply chain to replenish our stores as well as deliver to customer even going back to 2018, 2019. And thankfully, we did. We have built out over 20 think of pick, pack and ship. Mean these are massive 500,000 to 1,000,000 square feet distribution centers, pick, pack and ship, largely parcel, but some big and bulky as well, where we could reach 90% of the population in two days or less.

So we’ve now accomplished that, but not everyone necessarily appreciated that and then two days is great, but next day and even same day is better. So a number of months ago, we said we’ve got these terrific sets of assets. We need to be faster. What do we need to do to get even faster? So number of very conscious decisions.

Billy and the merchant teams significantly increased the assortment in the depth of inventory in those 23 direct fulfillment centers. We increased marketing with very much a speed and delivery message. We got we believe and we look at prices daily. We widened our price gap with key competition. We, for the first time, partnered with delivery agents and sort of gig economy delivery agents, something we hadn’t done, but that was a way to quickly get same day or few hour delivery with Instacart and DoorDash and Roadie and the like, and those have been great partnerships.

So we put all that together and went to market with it and increased our marketing budget significantly and the proof is in the pudding in the acceleration of our online business as people realize, wow, Home Depot like I just ordered that. I mean it came in the afternoon that I ordered it. So our stickiness or repeat purchases and frequency in that speed message and capability that we started building out again in the late teens is what’s accelerated that online comp.

Billy Bastik, Executive Vice President of Merchandising, Home Depot: Yes, and certainly utilizing our stores. Now our stores have done deliveries for forty five years. A little less of that has been in that kind of consumer parcel space. So, really implementing some technology around ship from best location with the lens of same day, next day kind of what customer is really looking for and in some cases demanding. And so we put our stores in the middle of that where we couldn’t meet a next day delivery from our 23 DFCs that we had and putting them in the middle of that has been really great.

We mentioned some of the partnerships we’ve had, but there’s no question that, that from a speed standpoint, you have to tell people. I think one of the things we learned is not everybody saw us for that component, and we’ve been delivering parcel for some time. So the technology around ship from best location, and this will be even more of an opportunity for us when you start to say now there’s 1,200 more locations on the pro side to make part of that ecosystem of ship from best location, and we’ll talk more about that in December, of course. But that’s been a big game changer. We had 12% comps, as we mentioned during the call online.

And the bigger piece is the stickiness that we’re seeing with those customers that maybe didn’t know that we had that kind of speed in the marketplace. So really pleased with the stickiness of those customers, the repeatable ordering that they’re doing and really, and we invested you saw our inventory numbers. We invested we’d say some of our best investments we’ve made is taking advantage of those assets all over the country and investing inventory there and getting it ultimately closer to the customer. You couple that with our big and bulky opportunity that we have as the next tranche. And again, we’ll talk more about that in December, but we’re really excited about the work that’s been done there.

Ted Decker, Chairman, President, and Chief Executive Officer, Home Depot: And the speed has never been faster. So we are measuring, as you can imagine every day, what’s our average promise time on parcel, on bulk, on house shipped, on vendor shipped, percentages delivered same day, next day, two days And all those metrics have had dramatic improvements over the last several months and again all being reflected in that acceleration of the online comp.

Kate: Great. Thank you for that. In the last five minutes here, we have five questions we’re asking every company that’s appear on stage with us today. Just meant to kind of be rapid fire questions. We’ve touched on some of them already.

But the health of the consumer and the second half environment, do you expect the environment in the ’5 to be better, the worse or better, worse or the same than the first half?

Ted Decker, Chairman, President, and Chief Executive Officer, Home Depot: I would say better as the $150 odd billion tax cut benefit starts to flow through to our consumer.

Kate: On pricing, we also talked about this a little bit as well. You’ve only started to push through some price. Have you seen any elasticity impact as a result of some of those pricing actions? Or do you anticipate that?

Billy Bastik, Executive Vice President of Merchandising, Home Depot: Yes. It’s interesting. I think folks that follow us know us, we have the widest set of competitive set of anybody. So we’re looking at pricing across the board. I don’t know that there’s a lot of elasticity in anything that we sell per se.

We know, as Bernie Marcus would always say, prices go up, units go down. So but in any number of time, we have hundreds and hundreds of pricing tests ongoing, up, down, commodity, so by market. So we watch that very closely and know that we’ll see about the pressure on the consumer more broadly in the back half, but the continued momentum we saw, we updated our guidance in the Q2 call, We’re very comfortable with how we’re going be able to go to market there.

Kate: The third question is around inventory, just your expectations for inventory growth in the second half.

Billy Bastik, Executive Vice President of Merchandising, Home Depot: Yes. Well, as I mentioned, we made some significant investments in our supply chain assets and again, thrilled with those. We haven’t made any purchases pull forward any purchases as it relates to the back half, both Q3 and Q4. We didn’t do that related to tariffs. We didn’t think that was a good use of our capital at the time.

So kind of BAU is there. We’ll continue to make investments where we see our customers leaning in. And as I mentioned, the DFC and our FDC networks, we’ll continue to invest there. But we haven’t pulled any inventory forward. So I wouldn’t look for anything different than what you’ve seen from a normal BAU from us.

Kate: Our fourth question is on margins and your expectation for non tariff margin drivers into ’twenty six, so freight, wages, materials.

Ted Decker, Chairman, President, and Chief Executive Officer, Home Depot: I’d say on operating costs, same, not a big change. When we affirmed guidance on the second quarter, we did comp and margin as well. So I would say that will largely be the same in the back half, and we’ll talk about ’twenty six onwards in December at our investor conference.

Kate: And then the last question is just around the competitive landscape. I think in general across retail, have seen a tick up in bankruptcies and store closures, not in the home improvement space necessarily, but more broad retail. Do you think market share consolidation will speed up, slow down or be about the same in

Billy Bastik, Executive Vice President of Merchandising, Home Depot: ’twenty six?

Ted Decker, Chairman, President, and Chief Executive Officer, Home Depot: Yes. Our space is a little different. I think competitive stance in the players will be largely unchanged, I mean, for the foreseeable future. There might be some consolidation. There’s a long term trend of consolidation in distribution space.

Every distributor regardless of product category is doing those small regional acquisitions with family owned businesses choose to sell. But other than the normal flow of distribution consolidation that would be similar competitive set. And again in our retail space, they are the players and think we are all healthy and sticking around.

Kate: Okay. Well, thank you so much for joining us today. I appreciate the time.

Billy Bastik, Executive Vice President of Merchandising, Home Depot: You. You, Kate.

Ted Decker, Chairman, President, and Chief Executive Officer, Home Depot: Thank you all. You.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.