Home Depot hopes to cut costs to reduce impact of tariffs on prices

Home Depot CEO Craig Menear said the company aims to minimize the impact that potential tariffs will have on prices by cutting costs elsewhere along its supply chain.

The company makes 70% of its goods domestically, which also lessens the effect, Menear said in an interview Monday on CNBC’s “Squawk on the Street. “

“Some of it has to get passed through,” he said, but added that it was too early to know exactly where the impact would land.

“There’s always ways — when you look at the entire value chain between the supplier all the way through our operations — … to be able to offset these costs,” he said.

In May, Home Depot said it expected adjusted earnings per share to rise 3.1% to $10.03 per share, with a 5% increase in same-store sales and a 3.3% increase in revenue.

For the second quarter, analysts surveyed by Refinitiv estimate the company will earn $3.09 per share on $31 billion in revenue.

Menear also said the recent drop in the price of lumber continues to put pressure on the home improvement retailer, but that demand has picked up with the improving summer weather. He said the company’s professional contractors are busy and booked whenever he calls the stores.  

Consumers are also spending more on remodeling and home maintenance as the nation’s housing supply ages, he said, adding that 52% of the housing stock in the U.S. is 40 years or older.

Menear also indicated that Lowe’s has been and will continue to be a good competitor, and that their addition of a new CEO doesn’t change that.

“We are looking forward to a great finish to the year,” he said.

Home Depot’s shares have risen by more than 20% so far this year, giving it a market value of about $230 billion as of Friday’s closing price of $209.39 a share. Its shares were down 1.9% in intraday trading Monday.