The Surprising Reason Why Home Depot Isn’t Raising Prices Due To Tariffs
Written by
Jordan Rosenfeld
Edited by
Levi Leidy
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While many of the nation’s leading retailers brace to pay steeper tariffs for their imports, consumers are likewise holding their collective breath to see which stores will hike up prices.
Surprisingly, Home Depot, one of the leading home repair supply companies in the country, does not anticipate raising its prices due to tariffs.
Here’s the reason why, and what stockholders will want to know.
Diversifying Supply Chains
Home Depot has been prescient in its approach to supply chains — rather than continuing to rely largely on China for the majority of its goods like other companies, it has been slowly diversifying.
Currently they already get more than half of their products from U.S. suppliers, and within a year’s time expect to rely on no single country for more than 10% of their purchases.
“Because of our scale, the great partnerships we have with our suppliers and productivity that we continue to drive in our business, we intend to generally maintain our current pricing levels across our portfolio,” Home Depot’s chief financial officer Richard McPhail told CNBC.
Learn More: I Asked ChatGPT What Will Get More Expensive When Trump’s Tariffs Go Into Effect, Here’s What It Said
Can This Dynamic Hold?
This strategy seems like a solid way to reduce dependence on the countries that will be the most heavily tariffed. However, Home Depot’s future earnings could still be affected by how tariff increases are trickling down to consumers. In addition, high interest and mortgage rates are contributing to many homeowners slowing their home repair spend.
That said, Home Depot executives feel confident in the company’s stability for the foreseeable future.
Home Depot Earnings
Home Depot’s rising sales has given them the confidence to weather the current economic reality. Their fourth quarter earnings showed $39.86 billion versus the expected $39.31 billion. With revenue on an upswing, executives expect the company’s total sales to grow by 2.8% — though this forecast is based on a recent U.S. agreement to temporarily lower tariffs to 30% on imports from China and to 10% for many other countries.
What It Means for Home Depot Stockholders
If you’re invested in Home Depot stock, you can comfortably hold onto it knowing that it’s likely to remain steady at worst, and even rise in value, at best. Dividends are paying out at about $3.56 per share.
Home Depot’s proactive strategy and steady earnings offer a rare dose of stability in a high-tariff environment. In an economic landscape with not a lot of good news, this could be reassuring to stockholders and shoppers alike.
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