Why did HD's Q1 2025 earnings fall short?

The Home Depot's (HD) Q1 2025 earnings fell short, missing the Zacks Consensus Estimate, despite a 14.1% increase in revenue to $39.7 billion and a reported EPS of $3.13, compared to $2.82 in the year-ago quarter. The key factors contributing to the shortfall include:

1. **Soft Guidance and Macroeconomic Uncertainty**: The company's guidance for the full year indicated a conservative outlook, anticipating a 2% decline in EPS. This cautious stance was influenced by uncertain macroeconomic conditions, including high and persistent interest rates, which have led to a cautious approach from consumers regarding large remodeling projects.
2. **Consumer Cautiousness on Large Remodels**: Home Depot's CEO noted that customers are showing caution toward large remodeling projects, which has impacted the company's performance. This reluctance is likely due to the high cost of borrowing, which has discouraged spending on discretionary, high-ticket items.
3. **Challenging Housing Market and Softened Demand**: The company is facing challenges due to a weak housing market and softened demand, which has resulted in a decline in sales and comparable sales growth. This decline is not unique to Home Depot, as the broader Retail-Wholesale sector has also seen a dip in demand for discretionary products.

In summary, Home Depot's Q1 2025 earnings fell short due to a combination of soft guidance, macroeconomic uncertainty, consumer cautiousness on large remodels, and a challenging housing market. These factors collectively contributed to the company's subdued performance in the quarter.