⚠ Customers Trading DownModerate threat

Home Depot (HD) — threat to the moat

Home Depot's merchants already see customers trading down to cheaper countertops and appliances, the exact items that built its ticket growth.

Ticket growth built on price is vulnerable to a customer who chooses cheaper goods. On the fourth-quarter fiscal 2025 call, the merchandising chief said some customers were trading down to lower-priced countertops and appliances, though the behavior had not been widespread1.

Comparable ticket vs transactions, fiscal years (%)+8.8%Ticket FY2022-5.4%Transactions FY2022+1.4%Ticket FY2025-1.0%Transactions FY2025Home Depot Forms 10-K fiscal 2023 and 2025; signs shown in labels
The price lever is running slower.

The departments that depend on big projects are where it shows. Appliances were one of three departments without positive comparable sales in the second quarter of fiscal 2026, alongside Lighting and Lumber2. Appliances are Home Depot's largest department, $13,987 million in fiscal 20253.

Decker described the mood differently: there is maybe a bit more repair than replace4. Repair baskets are smaller than replacement baskets.

The same call showed the opposite behaviour at the high end. Big-ticket purchases above $1,000 rose 1.3%, because of customers trading up for new and innovative items5. The customer base is splitting: some trade up, some trade down, and the ticket averages the two.

The test is ticket growth against price increases. If average ticket growth falls below 1% while Home Depot is still raising prices, customers are buying cheaper goods, and the ticket-led model is running out of room.

References
  1. ReportedOn the fourth-quarter fiscal 2025 call, the merchandising chief said some customers were trading down to lower-priced countertops and appliances, though the behavior had not been widespread.
    CNBC on Home Depot's fourth quarter of fiscal 2025: shingle shipments down 28%, repair rather than replace, tariffs, and no single foreign country above 10% of purchases. — Q4 fiscal 2025 · publ. 24 February 2026 · source ↗
  2. ReportedAppliances were one of three departments without positive comparable sales in the second quarter of fiscal 2026, alongside Lighting and Lumber.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
  3. ReportedAppliances are Home Depot's largest department, $13,987 million in fiscal 2025.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 7 MD&A: segments, comparable sales, transactions, product lines, margins and ROIC. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  4. ReportedDecker described the mood differently: there is maybe a bit more repair than replace.
    CNBC on Home Depot's fourth quarter of fiscal 2025: shingle shipments down 28%, repair rather than replace, tariffs, and no single foreign country above 10% of purchases. — Q4 fiscal 2025 · publ. 24 February 2026 · source ↗
  5. ReportedBig-ticket purchases above $1,000 rose 1.3%, because of customers trading up for new and innovative items.
    CNBC on Home Depot's fourth quarter of fiscal 2025: shingle shipments down 28%, repair rather than replace, tariffs, and no single foreign country above 10% of purchases. — Q4 fiscal 2025 · publ. 24 February 2026 · source ↗
Sources
Generated September 26, 2026