Despite the improvement in Home Depot's sales, consumers remain cautious about their spending.

• Home Depot posted quarterly earnings and revenue that beat estimates.
• The acquisition of SRS Distribution, hurricane-related repairs, and warmer-than-usual weather contributed to a rise in sales for the company.
• After a period of high interest and mortgage rates, consumers are being cautious, the company stated.

The company's quarterly sales increased by more than 6% year over year due to the acquisition of a new business, hurricane-related repairs, and improved weather conditions, which boosted demand for home improvement supplies, the company announced Tuesday.

The retailer has revised its full-year sales outlook to reflect better-than-expected results. It now anticipates a 4% increase in total sales, including the impact of acquiring SRS Distribution. Previously, it projected a rise of between 2.5% and 3.5% for the year. Both outlooks include a boost from a 53rd week in the fiscal year and an approximately $6.4 billion contribution from SRS, which sells supplies to professionals in the roofing, landscaping, and pool businesses.

Home Depot anticipates a decline of approximately 2.5% in comparable sales for the upcoming 52-week period. Previously, the company had projected a drop of between 3% and 4% in the industry metric, which encompasses both the company's website and stores that have been open for more than a year, compared to the previous fiscal year.

In an interview with CNBC, Richard McPhail, the Chief Financial Officer of the retailer, stated that the company's forecast reflects the positive results from the past quarter. However, he added that consumers are delaying their purchases due to their anticipation of lower mortgage rates and borrowing costs, and are also exercising caution about the economy.

"Our customers' lives are changing, and they need to move for various reasons. There is demand for remodeling, but they are putting it on hold due to unfavorable financing. The question is when this demand will be unlocked."

Despite being financially stable, Home Depot customers have delayed starting projects, according to the company's CEO. Approximately 90% of the company's DIY customers own their homes.

According to a survey of analysts by LSEG, the company's reported results for the three-month period that ended Oct. 27 differed from Wall Street's expectations.

• Earnings per share: $3.67 vs. $3.64 per share expected
• Revenue: $40.22 billion vs. $39.32 billion expected

Home Depot shares rose more than 1% in premarket trading.

Economic factors, such as higher interest rates and prolonged high inflation, have negatively impacted Home Depot's sales. The company previously predicted a decline in comparable sales due to consumer uncertainty, which was announced in August.

Those dynamics persisted in recent months, McPhail said.

In the fiscal third quarter, Home Depot's net income decreased to $3.65 billion, or $3.67 per share, from $3.81 billion, or $3.81 per share, in the previous year. Despite this, revenue increased by 6.6% from $37.71 billion in the previous year.

While comparable sales fell 1.3% in the quarter across the business, this was better than the 3.3% drop that analysts expected, according to StreetAccount. In the U.S., the metric fell by 1.2%.

Despite the eighth consecutive quarter of negative comparable sales at Home Depot, which was the smallest decline since the streak began, the stock's performance has not been negatively impacted this year.

Despite trailing the S&P 500's gains of approximately 26% this year, Home Depot's shares have increased by about 18% as of Monday's close. The company's stock finished at $408.29 a share, giving it a market value of $405.55 billion.

In the current quarter, shoppers spent an average of $88.65 at Home Depot's stores and online, which is almost the same as the $89.36 average ticket in the previous year.

Home Depot anticipates opening approximately 12 new stores during the current fiscal year, which concludes in early February.

The warm and dry weather in the quarter benefited Home Depot temporarily, as customers bought outdoor items and paint for projects, McPhail stated.

The sales growth in the quarter was driven by approximately half a percentage point due to the sales related to hurricanes Helene and Milton. Customers bought items for preparation, including generators, batteries, and plywood, and then made purchases for repairs, such as building materials.

Despite Home Depot's moderate growth, some investors anticipate stronger sales in the near future. The Federal Reserve recently approved its second consecutive interest rate cut, which affects the cost of consumer debt, including mortgage rates and loans for home renovation projects. Despite high housing prices, the age of U.S. housing stock continues to drive repair and maintenance projects.

Home Depot has driven sales by chasing bigger business from home professionals, including contractors and roofers. Earlier this year, Home Depot acquired SRS Distribution, a Texas-based company, in a $18.25 billion deal, the largest acquisition in the home improvement retailer's history.

McPhail pointed out that predicting when consumers' mindset will shift and cause higher housing turnover is challenging. He also mentioned that mortgage rates have risen since the September meeting where the Fed reduced rates for the first time since the early days of the Covid pandemic.

"The decline in housing turnover may not worsen further, but the question is, 'What will unfreeze it and when will it happen?'"

If President-elect Donald Trump implements tariffs on imported goods, especially from China, Home Depot could face higher costs and price pressures in the coming year, along with other retailers.

McPhail refused to reveal the exact percentage of Home Depot's products that originate from China, but he stated that most of its supply comes from North America. He added that Mexico is a significant supplier for the company.

""We source from several Asian countries and will closely monitor it in the future," he stated."

Some retail leaders, including the CEO of E.l.f. Beauty, have stated that they may need to increase prices due to tariffs. Meanwhile, footwear manufacturer Steve Madden has announced plans to decrease the amount of goods imported from China by up to 45% in the upcoming year.

The holiday season, in addition to weather, has boosted sales for Home Depot, which offers a diverse selection of decor, including numerous artificial Christmas trees.

Home Depot has introduced various eye-catching decorations, including an 8-foot Santa Claus and a large animated reindeer, following the success of their 12-foot skeleton, Skelly, during Halloween.

"Our Home Depot giant outdoor decor is not limited to just a few neighborhoods in the U.S. Therefore, we're coming to your neighbor's front yard, and you don't want to be outdone."