⚠ Fifteen New Stores a YearModerate threat

Home Depot (HD) — threat to the moat

Fifteen new stores on a base of 2,359 cannot move the numbers, so the core has to grow inside buildings it already owns.

Home Depot's guidance for fiscal 2026 includes approximately 15 new stores1. On a base of 2,3592 that is well under one percent. The estate will not grow the business; each store has to sell more, or the growth has to come from somewhere else.

Net stores added by fiscal year13FY202312FY202412FY2025Home Depot Forms 10-K; year-end store counts 2,322 to 2,359; calculated
Flat for three years, even with an extra week.

For a decade the stores did sell more. Net sales rose 63% from fiscal 2017 to fiscal 2025 while the store count rose 3.3%3. Since fiscal 2023 that has stopped: Primary segment net sales, the stores plus online and HD Supply, were $152,669 million in fiscal 2023 and $151,966 million in fiscal 20254.

The company chose the other route. It spent $17,644 million on acquisitions in fiscal 2024 and $5,410 million in fiscal 20255, buying distributors with branches rather than opening stores.

The store count moved by only a handful a year even before the guidance: 2,322 at the end of fiscal 2022, 2,335 in fiscal 2023, 2,347 in fiscal 2024 and 2,359 in fiscal 20256789. By August 2026 there were 2,36410. Growth by building is not the plan; it has not been for years.

The risk is that a mature estate becomes a cost base rather than a growth engine. Watch comparable sales, 1.7% in the second quarter of fiscal 202611: a fiscal year below 2% again would say the buildings have run out of room to grow on their own.

References
  1. ReportedHome Depot's guidance for fiscal 2026 includes approximately 15 new stores.
    The Home Depot fourth-quarter and fiscal 2025 results release, Form 8-K exhibit 99.1 - fiscal 2026 guidance, the dividend raised to $2.33 a quarter, adjusted EPS of $14.69. — Fiscal 2025 · publ. 24 February 2026 · source ↗
  2. ReportedOn a base of 2,359 that is well under one percent.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business and Item 2 properties: stores, Pros, SRS, competition and supply chain. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  3. Moat Explorer calcNet sales rose 63% from fiscal 2017 to fiscal 2025 while the store count rose 3.3%.
    Moat Explorer calculation from The Home Depot's filings and market data ($ millions unless stated; fiscal years as Home Depot names them, fiscal 2025 = year to 1 February 2026). Segments: Primary net sales 151,966 / 152,669 - 1 = -0.5% (fiscal 2023 to 2025); Primary operating income 20,574 / 21,689 - 1 = -5.1%; Primary operating margin 21,689 / 152,669 = 14.2% (fiscal 2023), 21,313 / 153,108 = 13.9% (fiscal 2024), 20,574 / 151,966 = 13.5% (fiscal 2025); Other operating margin 213 / 6,406 = 3.3% (fiscal 2024), 316 / 12,717 = 2.5% (fiscal 2025); Other before intangible amortisation 316 + 398 = 714, 714 / 12,717 = 5.6%; Other share of net sales 12,717 / 164,683 = 7.7%; Other share of operating income 316 / 20,890 = 1.5%. Q2 fiscal 2026: Primary 42,806 / 42,157 - 1 = +1.5%, margin 6,592 / 42,806 = 15.4%; Other 5,055 / 3,120 - 1 = +62%, margin 247 / 5,055 = 4.9%; Q2 fiscal 2025 margins: Primary 6,354 / 42,157 = 15.1%, Other 201 / 3,120 = 6.4%; Q1 fiscal 2026 Primary 80,569 - 42,806 = 37,763 and 11,557 - 6,592 = 4,965, margin 13.1%; Other 9,057 - 5,055 = 4,002 and 263 - 247 = 16, margin 0.4%. Pro acquisitions 8,692 + 18,028 + 5,081 + about 1,100 = about 32,900 (HD Supply, SRS, GMS, Mingledorff's). Growth: net sales 164,683 - 159,514 = 5,169 in fiscal 2025 against about 6,300 contributed by acquisitions; fiscal 2025 over fiscal 2023 164,683 - 152,669 = 12,014, of which Other 12,717. Net sales fiscal 2017 to fiscal 2025 164,683 / 100,904 - 1 = +63%; stores 2,359 - 2,284 = 75, 75 / 2,284 = +3.3%. Traffic: transactions 1,601.5 / 1,500.8 - 1 = +6.7% (fiscal 2015 to 2025); 1,601.5 / 1,759.7 - 1 = -9.0% (fiscal 2021 to 2025); average ticket 90.56 / 58.77 - 1 = +54%. Net sales per store 164,683 / 2,359 is not meaningful because Other has no stores; Primary 151,966 / 2,359 = 64.4 per store. Margins: operating margin 21,689 / 152,669 = 14.2%, 21,526 / 159,514 = 13.5%, 20,890 / 164,683 = 12.7%; SG&A 30,702 / 28,748 - 1 = +6.8% against net sales +3.2%; Primary SG&A 28,885 / 27,822 - 1 = +3.8% against Primary net sales 151,966 / 153,108 - 1 = -0.7%; interest expense 2,412 / 1,943 - 1 = +24%; operating income / interest 20,890 / 2,412 = 8.7 times. Departments: Lighting 4,006 / 4,549 - 1 = -11.9%; Flooring 8,232 / 8,703 - 1 = -5.4%; Storage and Organization 5,054 / 4,881 - 1 = +3.5%; Appliances 13,987 / 164,683 = 8.5%. Classes fiscal 2025: 52,439 + 51,679 + 47,848 = 151,966 = Primary net sales. Net margin 14,156 / 164,683 = 8.6%; Lowe's 6.63 / 90.43 = 7.3%; Lowe's price to sales 106.20 / 90.43 = 1.17 against 1.73; Primary share 151,966 / 164,683 = 92.3%; cost of sales 164,683 - 54,865 = 109,818. Primary share Q2 fiscal 2026 42,806 / 47,861 = 89.4%; H1 net sales increase 89.6 - 85.1 = 4.5bn, GMS 2.8 / 4.5 = 62%; average ticket 89.31 / 90.36 - 1 = -1.2%; equity build 14,156 - 9,152 = 5,004; buyback authorization 11.66 / 292.52 = 4.0% of market value; depreciation and amortisation as a share of sales, Other 715 / 12,717 = 5.6%, Primary 3,344 / 151,966 = 2.2%. US share 152,170 / 164,683 = 92.4%. Mexico stores 2,359 - 2,035 - 182 = 142. Other share of net sales 6,406 / 159,514 = 4.0% (fiscal 2024), 5,055 / 47,861 = 10.6% (Q2 fiscal 2026). Sales per retail square foot 627.17 / 454.82 - 1 = +38% (fiscal 2019 to 2022), 599.92 / 627.17 - 1 = -4.3% (fiscal 2022 to 2024). Tariff refunds 685 / 47,861 = 1.4% of Q2 net sales; 685 / 16,115 = 4.3% of Q2 gross profit; refunds in inventory cost 730 - 685 = about 45. Receivables 5,597 / 4,903 - 1 = +14.2%. Capital: net debt 4,464 + 4,967 + 46,341 - 1,389 = 54,383 (1 February 2026); 316 + 4,582 + 48,485 - 1,659 = 51,724 (2 February 2025); 4,248 + 4,697 + 43,951 - 2,085 = 50,811 (2 August 2026); net debt / equity 54,383 / 12,813 = 4.2 times; goodwill and intangibles 22,344 + 10,329 = 32,673, 32,673 / 105,095 = 31.1% of total assets. Free cash flow 16,325 - 3,679 = 12,646 (fiscal 2025), 19,810 - 3,485 = 16,325 (fiscal 2024), 21,172 - 3,226 = 17,946 (fiscal 2023); dividends paid / free cash flow 9,152 / 12,646 = 72.4%; dividend per share / diluted EPS 9.20 / 14.23 = 64.7%; capex / net sales 3,679 / 164,683 = 2.2%. Average debt and equity 61,914 / 44,955 - 1 = +38%; SRS + GMS 18,028 + 5,081 = 23,109; interest expense 2,412 - 1,943 = 469; operating cash flow / dividends paid 16,325 / 9,152 = 1.8 times; free cash flow 12,646 / 17,946 - 1 = -30%; dividend per share 9.00 / 8.36 - 1 = +7.7%, 9.20 / 9.00 - 1 = +2.2%, 2.33 / 2.30 - 1 = +1.3%. Repurchases fiscal 2015-2023: 7,000 + 7,000 + 8,002 + 10,000 + 7,000 + 597 + 15,001 + 6,504 + 8,074 = 69,178; diluted shares 995 / 1,283 - 1 = -22%. H1 fiscal 2026 EPS 8.09 / 14.23 = 57%. Market: 292.52 / 14.26 = 20.5 times trailing earnings; 292.52 / 169.18 = 1.73 times sales; 292.52 / 433.37 - 1 = -32.5% from the end-2021 value; Lowe's 106.20 / 292.52 = 36%, 90.43 / 169.18 = 53% of revenue; dividend yield 9.32 / 293.20 = 3.2%; trailing diluted EPS 14.23 + 8.09 - (3.45 + 4.58) = 14.29; trailing net income 292.52 / 20.52 = about 14.26bn - segments, sales, traffic and margins. — Fiscal 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in The Home Depot's Forms 10-K and 10-Q, results releases and market data; operands shown in the source line.
  4. ReportedSince fiscal 2023 that has stopped: Primary segment net sales, the stores plus online and HD Supply, were $152,669 million in fiscal 2023 and $151,966 million in fiscal 2025.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business: competition, online and the interconnected experience. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  5. ReportedIt spent $17,644 million on acquisitions in fiscal 2024 and $5,410 million in fiscal 2025, buying distributors with branches rather than opening stores.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business and Item 2 properties: stores, real estate, supply chain and workforce. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  6. ReportedThe store count moved by only a handful a year even before the guidance: 2,322 at the end of fiscal 2022, 2,335 in fiscal 2023, 2,347 in fiscal 2024 and 2,359 in fiscal 2025.
    The Home Depot Form 10-K for fiscal 2022 - net sales and net earnings for fiscal 2020-2022 and total sales per retail square foot of $627.17. — Fiscal 2022 · publ. March 2023 · source ↗
  7. ReportedThe store count moved by only a handful a year even before the guidance: 2,322 at the end of fiscal 2022, 2,335 in fiscal 2023, 2,347 in fiscal 2024 and 2,359 in fiscal 2025.
    The Home Depot Form 10-K for fiscal 2023 - comparable sales, transactions and ticket for fiscal 2021-2023, ROIC of 36.7%, 44.6% and 44.7%, and stockholders' equity including the deficit of January 2022. — Fiscal 2023 · publ. March 2024 · source ↗
  8. ReportedThe store count moved by only a handful a year even before the guidance: 2,322 at the end of fiscal 2022, 2,335 in fiscal 2023, 2,347 in fiscal 2024 and 2,359 in fiscal 2025.
    The Home Depot Form 10-K for fiscal 2024 (53 weeks ended 2 February 2025) - the SRS purchase consideration, the 53rd week and total sales per retail square foot of $599.92. — Fiscal 2024 · publ. March 2025 · source ↗
  9. ReportedThe store count moved by only a handful a year even before the guidance: 2,322 at the end of fiscal 2022, 2,335 in fiscal 2023, 2,347 in fiscal 2024 and 2,359 in fiscal 2025.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business and Item 2 properties: stores, real estate, supply chain and workforce. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  10. ReportedBy August 2026 there were 2,364.
    The Home Depot second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - sales, comparable sales, transactions, ticket, earnings, reaffirmed guidance and the balance sheet. — Q2 fiscal 2026 · publ. 18 August 2026 · source ↗
  11. ReportedWatch comparable sales, 1.7% in the second quarter of fiscal 2026: a fiscal year below 2% again would say the buildings have run out of room to grow on their own.
    The Home Depot second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - sales, comparable sales, transactions, ticket, earnings, reaffirmed guidance and the balance sheet. — Q2 fiscal 2026 · publ. 18 August 2026 · source ↗
Sources
Generated September 26, 2026