HOME DEPOT INC

RESULTS OF OPERATIONS

The following table presents the percentage relationship between net sales and major categories in our consolidated statements of earnings.

FISCAL 2025 AND FISCAL 2024 THREE MONTH COMPARISONS

Note: Certain percentages may not sum to totals due to rounding.

(1)Customer transactions and average ticket measures do not include results from HD Supply or SRS.

(2)Average ticket represents the average price paid per transaction and is used by management to monitor the performance of the Company, as it represents a primary driver in measuring sales performance.

Sales

We assess our sales performance by evaluating both net sales and comparable sales. In fiscal 2025, there is a one-week calendar shift as a result of the 53rd week in fiscal 2024. For purposes of the following discussion, comparable sales, comparable customer transactions, and comparable average ticket are based upon the comparable 13-week period from fiscal 2024.

Net Sales. Net sales for the first quarter of fiscal 2025 were $39.9 billion, an increase of 9.4% from $36.4 billion for the first quarter of fiscal 2024. The increase in net sales for the first quarter of fiscal 2025 was primarily driven by SRS, which was acquired in the second quarter of fiscal 2024 and contributed $2.6 billion of net sales during the first quarter of fiscal 2025. Additionally, due to the 53rd week in fiscal 2024, the first quarter of fiscal 2025 included one less week of winter and one additional week of spring, which further contributed to the increase in net sales in the first quarter of fiscal 2025.

Online sales, which consist of sales of products generated through websites and mobile applications, represented 15.5% of net sales during the first quarter of fiscal 2025 and increased by 10.9% compared to the first quarter of fiscal 2024, which includes the benefit of the seasonal timing shift. Calculated on a comparable week basis relative to fiscal 2024, online sales increased by 8.3%.

A stronger U.S. dollar compared to thefirst quarter of fiscal 2024 negatively impacted net sales by $275 million during the first quarter of fiscal 2025.

Comparable Sales. Comparable sales is a measure that highlights the performance of our existing locations and websites by measuring the change in net sales for a period over the comparable prior period of equivalent length. Comparable sales includes sales at all locations, physical and online, open greater than 52 weeks (including remodels and relocations) and excludes closed stores. Retail stores become comparable on the Monday following their 52 nd week of operation. Acquisitions are typically included in comparable sales after they have been owned for more than 52 weeks. Fiscal 2025 includes 52 weeks and fiscal 2024 included 53 weeks. For our calculation of comparable sales in fiscal 2025, we will compare weeks 1 through 52 in fiscal 2025 against weeks 2 through 53 in fiscal 2024. Comparable sales is intended only as supplemental information and is not a substitute for net sales presented in accordance with GAAP. The method of calculating comparable sales varies across the retail industry. As a result, our method of calculating comparable sales may not be the same as similarly titled measures reported by other companies.

Total comparable sales for the first quarter of fiscal 2025 decreased 0.3%, primarily reflecting a 0.5% decrease in comparable customer transactions and a flat comparable average ticket compared to the first quarter of fiscal 2024. Foreign exchange rates negatively impacted comparable sales by approximately 70 basis points for the quarter. Our comparable sales performance continues to reflect the impact of macroeconomic uncertainties and other macroeconomic factors, including a persisting high interest rate environment pressuring home improvement demand.

During the first quarter of fiscal 2025, our Appliances, Plumbing, Indoor Garden, Electrical, Outdoor Garden and Building Materials merchandising departments posted positive comparable sales compared to the first quarter of fiscal 2024. All of our other merchandising departments posted negative comparable sales during the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024.

Gross Profit

Gross profit for the first quarter of fiscal 2025 increased 8.3% to $13.5 billion from $12.4 billion for the first quarter of fiscal 2024. Gross profit as a percentage of net sales, or gross profit margin, was 33.8% for the first quarter of fiscal 2025 compared to 34.1% for the first quarter of fiscal 2024. The decrease in gross profit margin primarily reflects the inclusion of SRS in our consolidated results, partially offset by lower shrink and supply chain productivity within our Primary segment.

Operating Expenses

Our operating expenses are composed of SG&A and depreciation and amortization.

Selling, General & Administrative. SG&A for the first quarter of fiscal 2025 increased $863 million, or 12.9%, to $7.5 billion from $6.7 billion for the first quarter of fiscal 2024. As a percentage of net sales, SG&A was 18.9% for the first quarter of fiscal 2025 compared to 18.3% for the first quarter of fiscal 2024, primarily reflecting the impact of a non-recurring legal-related benefit recognized in the first quarter of fiscal 2024 as well as higher payroll costs in the first quarter of fiscal 2025 within our Primary segment.

Depreciation and Amortization. Depreciation and amortization for the first quarter of fiscal 2025 increased $109 million, or 15.9%, to $796 million from $687 million for the first quarter of fiscal 2024. As a percentage of net sales, depreciation and amortization was 2.0% for the first quarter of fiscal 2025 compared to 1.9% for the first quarter of fiscal 2024, primarily reflecting increased intangible asset amortization expense related to SRS.

Interest and Other, net

Interest and other, net for the first quarter of fiscal 2025 increased $163 million, or 38.1%, to $591 million from $428 million for the first quarter of fiscal 2024. As a percentage of net sales, interest and other, net was 1.5% for the first quarter of fiscal 2025 compared to 1.2% for the first quarter of fiscal 2024, primarily reflecting higher interest expense driven by higher long-term debt.

Provision for Income Taxes

Our combined effective income tax rate was 24.4% for the first quarter of fiscal 2025 compared to 22.6% for the first quarter of fiscal 2024. The increase in our effective tax rate was driven by certain discrete tax benefits recognized during the first quarter of fiscal 2024.

Diluted Earnings per Share

Diluted earnings per share were $3.45 for the first quarter of fiscal 2025 compared to $3.63 for the first quarter of fiscal 2024. The decrease in diluted earnings per share was primarily driven by lower net earnings during the first quarter of fiscal 2025.