The Home Depot, the world’s largest home improvement retailer, reported its first-quarter earnings for fiscal 2025, revealing total sales of $39.9 billion, a 9.4% increase from the previous year. However, the company experienced a decline in comparable sales of 0.3%, with U.S. comparable sales increasing modestly by 0.2%. The negative impact of foreign exchange rates was approximately 70 basis points on total company comparable sales.

Net earnings for the quarter were recorded at $3.4 billion, translating to $3.45 per diluted share, compared to $3.6 billion or $3.63 per diluted share in the same quarter last year. The adjusted diluted earnings per share were $3.56, slightly decreased from $3.67 year-over-year, reflecting a drop of approximately 3%.

The Home Depot’s gross margin contracted by 35 basis points to 33.8%, while operating expenses increased to 20.9% of sales, showing a rise of about 70 basis points from the prior year. The operating margin decreased to 12.9%, down from 13.9% year-over-year. Adjusted operating margin was 13.2%, a slight decline from 14.1% last year.

During the quarter, operating income increased slightly to $5.1 billion, with an operating expense rise seen in selling, general, and administrative costs, which jumped about 12.9% year-over-year. Interest expenses rose significantly by $163 million, totaling $591 million, primarily due to increased debt levels compared to the previous year. The company’s effective tax rate edged up to 24.4% from 22.6% last year.

Home Depot reaffirmed its fiscal 2025 guidance, forecasting total sales growth of approximately 2.8% and comparable sales growth of about 1.0%. The company expects gross margin to stabilize around 33.4%, with operating margin anticipated at 13.0% and adjusted operating margin around 13.4%. It projects diluted earnings per share to decline about 3% compared to fiscal 2024 and adjusted diluted earnings to decrease by approximately 2%.

The first quarter saw the company’s capital expenditures at around $800 million, with a commitment to continue investing about 2.5% of sales back into the business. As of the end of the first quarter, Home Depot operated 2,350 stores, with merchandise inventories totaling $25.8 billion, which reflects an increase of 15% or approximately $3.3 billion compared to last year.

In summary, while Home Depot demonstrated substantial growth in sales, it faced mixed performance metrics in terms of comparable sales and profit margins throughout the first quarter of fiscal 2025.