Home Depot is preparing to raise prices, just months after promising to hold the line on costs.
On Tuesday, CFO Richard McPhail said tariffs are forcing the home improvement giant to pass along higher costs to shoppers.
‘Tariff rates are significantly higher today than they were at this time last quarter,’ McPhail told The Wall Street Journal.
‘So, as you would expect, there will be modest price movement in some categories, but it won’t be broad-based.’
The shift marks a reversal from May, when McPhail pledged to ‘generally maintain our current pricing levels across our portfolio.’
Home Depot, operating over 2,300 outlets, has sought to diversify its international supply network to reduce dependency on China, which bears the highest tariffs. Currently, 50% of its products are sourced from the US.
Still, analysts say tariffs are squeezing margins.
‘Home Depot is finding that tariffs will bite in terms of its own costs,’ Neil Saunders, retail expert at GlobalData, told Daily Mail.
Richard McPhail, The Home Depot’s CFO, said prices in ‘some categories’ will see ‘modest price movement’
‘It will need to selectively raise prices on some products as we move through this year.’
Still, Saunders noted that the company can’t raise prices across the board.
Competing retailers have adopted a strategy of offering lower prices to draw in customers, while incorporating higher-priced items, making it risky for any retailer to act too aggressively in terms of pricing.
‘Being competitive on price is key for Home Depot,’ Saunders added.
‘It will also not be alone. Other retailers, including other DIY chains, will need to increase their prices, too.’
Still, Home Depot executives said they’re confident the company can use its scale to bring some cost relief to customers.
While shoppers might see price hikes on certain items, executives say the entire bill is cheaper at its stores.
‘Our customers tend to shop with us for their entire project – not for a single item here or there,’ McPhail said.
The chain tells the Daily Mail that half of its product is made in the US
‘For example, they probably aren’t going to just buy a bathtub. They’re also going to buy the tile, the grout, the shower head, the vanity.
‘So, we’re focused on protecting the value of the entire project.’
Home Depot isn’t the only retailer under pressure.
Earlier this month, American carmaking giants Ford and GM slashed their profit expectations while reporting billion-dollar tariff costs this year.
Walmart, Target, Best Buy, and Amazon all initially warned consumers that President Donald Trump’s tariffs would continue to drive costs higher.
Trump criticized these companies for their announcements, urging them to shoulder the tariffs. He also deployed administration officials to label price increases as a ‘hostile and political act.’
The moves have largely silenced retailers from openly discussing price hikes.
However, they’re still slowly making their way through the economy.
In July, core inflation rose to 3.1 percent, a 0.3 percentage point increase from June.
Shortly after, the Labor Department disclosed that July’s producer price index, which gauges inflation before it impacts consumers, rose by 0.9% from June and increased by 3.3% compared to the previous year.
Economists predicted the number would be lower.
