The Home Depot logo is seen in this illustration taken, February 11, 2025. REUTERS/Dado Ruvic/Illustration

By Savyata Mishra

(Reuters) -Home Depot forecast a bigger drop in full-year profit after missing Wall Street estimates for quarterly earnings on Tuesday, as tariff-driven economic uncertainty dampened demand for big-ticket renovations and do-it-yourself projects.

The world's top home-improvement chain set the ball rolling for a week packed with earnings reports from big-box retailers, including Walmart and Target, as investors track U.S. consumer spending ahead of the all-important holiday season amid tariff-driven cost pressures.

"We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand," CEO Ted Decker said in a statement.

Home Depot and rival Lowe's face subdued demand as worries about a slowing labor market, economic uncertainty and a prolonged housing downturn blunt an expected boost from easing mortgage rates following the U.S. central bank's rate cuts.

"This print will feed the narrative that the economic backdrop has slowed," RBC analyst Steven Shemesh wrote in a note.

Home Depot's shares fell about 4% and those of Lowe's declined 2.7% in premarket trading. Lowe's is set to report results on Wednesday.

Home Depot projected annual adjusted earnings per share to decline 5%, compared with its prior target of a 2% drop year-on-year.

Annual same-store sales growth is expected to be "slightly positive", compared with an August forecast of a 1% increase.

Home Depot's comparable sales were largely flat in the third quarter, and comparable transactions fell 1.6%, as customers put off projects such as kitchen and bathroom remodels.

Chief Financial Officer Richard McPhail told CNBC in an interview that the company did not get the anticipated demand acceleration in the back half of the year from easing interest and mortgage rates.

Still, sales of $41.35 billion beat expectations of $41.10 billion, according to data compiled by LSEG.

Adjusted profit per share came in at $3.74, compared with estimates of $3.84.

(Reporting by Savyata Mishra in Bengaluru; Editing by Sriraj Kalluvila)