Home Depot’s net receivables increased approximately 18.5% year over year to $6.96 billion at the end of its fiscal second quarter, substantially outpacing the company’s 5.7% quarterly sales growth. At the same time, Home Depot generated $11.42 billion of operating cash flow during the first half of fiscal 2026, providing substantial capacity to fund dividends, debt repayments, capital expenditures and acquisitions.
Second-quarter net sales reached $47.86 billion, an increase of $2.58 billion from $45.28 billion a year earlier. Comparable sales increased 1.7%, while comparable sales in the U.S. increased a slower 1.3%, showing that total company growth continued to run well ahead of mature U.S. comparable-store growth.
The difference between total sales growth and comparable sales reflects growth occurring outside the comparable-sales measure, although Home Depot’s earnings release does not specifically quantify how much of the gap came from acquisitions, newer locations, international operations or other factors. The company ended the quarter with 2,364 retail stores and more than 1,340 SRS locations across its operating markets.
Underlying comparable-sales growth was itself driven more by spending per transaction than by increased customer traffic. Comparable customer transactions declined 1%, while comparable average ticket increased 2.8%. Total customer transactions declined to 443.2 million from 446.8 million, while average ticket increased to $92.50 from $90.01.
Home Depot nevertheless delivered higher quarterly profitability. Gross profit increased 6.5% to $16.12 billion from $15.13 billion, while operating income increased 4.3% to $6.84 billion from $6.56 billion.
Operating expenses grew faster than sales, increasing 8.2% to $9.28 billion. Selling, general and administrative expense increased 8.5% to $8.42 billion, contributing to GAAP operating margin declining slightly to 14.3% from 14.5%. Adjusted operating margin was 14.7% compared with 14.8% a year earlier.
Net earnings increased to $4.77 billion from $4.55 billion, while diluted EPS rose 4.6% to $4.79 from $4.58. Adjusted diluted EPS increased 5.1% to $4.92 from $4.68.
The balance sheet showed a notable increase in working-capital assets. Net receivables reached $6.96 billion compared with $5.88 billion at the comparable point last year, an increase of approximately $1.09 billion. Merchandise inventory also increased to $26.85 billion from $24.84 billion, while cash and equivalents stood at $2.09 billion.
Receivables therefore increased approximately 18.5%, more than three times the 5.7% rate of quarterly sales growth. The release does not provide enough detail to attribute that increase to a specific customer category or business, making it a balance-sheet trend to watch rather than one that can be directly tied to a particular operating driver from the earnings release alone.
Despite the increase in receivables and inventory, Home Depot produced substantial cash from operations. Net cash provided by operating activities totaled $11.42 billion during the first six months of fiscal 2026, including $570 million of positive working-capital changes.
Home Depot used $1.72 billion for capital expenditures during the first half and another $1.33 billion for business acquisitions. Net cash used in investing activities totaled approximately $3.01 billion.
The company also returned significant cash to shareholders while reducing debt. Home Depot paid $4.64 billion of cash dividends during the first half and repaid approximately $3.04 billion of long-term debt, while receiving only $122 million of proceeds from new long-term borrowings. Net cash used in financing activities totaled $7.70 billion.
Home Depot still carried substantial debt at quarter-end. Short-term debt totaled $4.25 billion, current installments of long-term debt were $4.70 billion and long-term debt excluding current installments stood at $43.95 billion. Long-term debt was lower than the $45.92 billion reported at the comparable point a year earlier.
Management reaffirmed its fiscal 2026 outlook following the stronger-than-expected Q2 performance. Home Depot continues to forecast 2.5% to 4.5% total sales growth and comparable sales ranging from flat to positive 2%, along with approximately 15 new stores. The company also continues to expect GAAP operating margin of 12.4% to 12.6% and adjusted operating margin of 12.8% to 13%.
The guidance incorporates IEEPA tariff refunds that Home Depot expects will partially offset unplanned fuel, energy and other product-input costs during fiscal 2026. With sales continuing to grow faster than U.S. comparable sales, operating cash flow exceeding $11 billion through six months and receivables rising materially faster than revenue, Home Depot’s second-half performance will provide additional visibility into how its expanding business mix translates into working capital and cash conversion.
KEY QUOTES:
“Our second quarter results exceeded our expectations. We saw broad based demand across the business as customers continued to engage in smaller projects.”
Richard McPhail, Executive Vice President and Chief Financial Officer of Home Depot
“This quarter’s results were a testament to our investments across the business and our associates’ focus on customer service. Our teams did an exceptional job executing throughout a dynamic environment, and I would like to thank them for their continued hard work and dedication.”
Ann-Marie Campbell, Senior Executive Vice President of Home Depot
