Estimated read time: 2-3 minutes
- Home Depot plans to raise some prices due to increased tariff costs.
- CFO Richard McPhail announced modest price increases for certain imported goods.
- Economic uncertainty and high interest rates are delaying major home renovation projects.
NEW YORK — Home Depot said Tuesday that some of its prices could be going up because of the cost of tariffs.
Until now, America's largest home improvement retailer has limited what it has said about the impact of tariffs on its prices. But after reporting quarterly results Tuesday, CFO Richard McPhail said Home Depot would have to implement some price increases as a result of the Trump administration's taxes on imports.
"For some imported goods, tariff rates are significantly higher today than they were at this time last quarter," he said in an interview with the Wall Street Journal that was confirmed by the company to CNN. "So as you would expect, there will be modest price movement in some categories, but it won't be broad based."
Three months ago, when asked about the impact of tariffs on pricing, the company said it would not speculate on its price plans, but that tariffs might lead it to no longer offer some items.
Home Depot said that a little less than half of its inventory comes from suppliers outside the United States. The company has previously said it was looking to diversify its supply base so that no foreign country supplied more than 10% of its goods.
Despite sales in the quarter jumping 5% from last year, Home Depot's net income slipped 0.2% over the same time period due to higher operating costs. The company believes its full-year earnings per share will fall 2% as economic uncertainty and high interest rates are keeping many consumers from moving forward with major home renovation plans.
"Certainly some relief on mortgage rates in particular could help," CEO Ted Decker said on the earnings call. Mortgage rates have spent most of the year stuck just under 7%.
"When we talk to our customers … both consumers and pros, the No. 1 reason for deferring the large project is general economic uncertainty. That is larger than prices of projects, of labor availability. By a wide margin, economic uncertainty is No.1," he added.
But company executives said Home Depot is confident it will see those large projects appear at some point in the future, driving better results.
"Our customers tell us the rate environment is giving them pause on larger remodeling projects," McPhail said. "Our pros … say that their customers tell them they're deferring projects. They're not canceling projects. Home improvement demand persists. And so our job is to position ourselves to be ready for that."
