Home Depot cuts back key employee benefit amid customer struggles

Home Depot has been grappling with weak consumer demand amid headwinds in the U.S. housing market. As the company works to boost sales, it is scaling back a key employee benefit after implementing several bold cost-cutting measures recently.

According to the company’s latest financial report, in the third quarter of 2025, Home Depot’s U.S. comparable sales increased only 0.1% year-on-year. In addition, the latest data from Placer.ai shows that Home Depot same-store traffic fell 0.4% year-on-year in the quarter.

The reason for Home Depot’s sluggish sales is that many consumers are avoiding buying new homes due to high interest rates and low supply in the U.S. housing market. The company also previously raised prices in some stores due to tariffs.

During an earnings call in November, Home Depot CEO Ted Decker said the company continued to see customers cut back on large home improvement projects, which are typically funded with loans.

“What’s impacting us and home improvement is continued pressure on housing and increased consumer uncertainty,” Decker said. “So take housing for example. I mean, housing has been weak for a while. We all know about rising interest rates and affordability issues. But we’re seeing even less volume now; housing activity as a percentage of housing stock is really at a 40-year low.”

Data from the National Association of Realtors shows that sales of existing homes in the United States fell 4.4% year-on-year last month, with the median sales price of an existing home reaching $396,800.

Although interest rates have been falling in recent months, the average 30-year mortgage rate remains above 6%, according to Freddie Mac.

“Median home prices hit a new high in January due to low supply,” NAR Chief Economist Lawrence Yun said in a release.

Home Depot decided to limit employee bonuses as it struggled to grow sales, according to a recent report from Bloomberg.

The home improvement retailer has reportedly sent a memo to eligible employees at its stores and corporate offices informing them that it will increase the minimum sales performance threshold for bonuses from 90% to 95%.

When employees reach that minimum, they will receive 25% of their adjusted pay target, down from 50% of their target.

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Home Depot said in the memo that the new bonus limits are more in line with “pre-pandemic standards.” These changes will be reflected in bonuses paid in September.

Home Depot’s move comes at a time when bonuses have been shrinking across the country over the past few years since the COVID-19 pandemic, according to new data from ADP Research.

• Between 2019 and 2024, less than half of American workers receive bonuses every year.

• Number of employees receiving bonuses decline From 2021.

• 2021, 43.7% of workers received bonuses. This percentage drops to 42.9% 2022 and 40.9% 2023.

• By 2024, less than 40% of workers received bonuses.

• Bonus amounts are also decreasing. The median bonus for all U.S. workers is $1,786 2024, down from $1,857 a year ago.
  Source: ADP Research

“Bonus use peaked in 2021, with nearly 44% of employees receiving bonuses,” Jeff Nezaj, director of analytics at ADP, wrote in the report. “Temporary labor shortages caused by the Covid-19 pandemic may have contributed to the increase in bonuses, as employers raised wages and paid additional fees to attract and retain workers.”

Home Depot adjusted its bonuses after making several cost-cutting changes to its supply chain and workforce.

In October, its subsidiary HD Supply closed a distribution facility in Mexico, Missouri, causing 61 employees to lose their jobs. Last month, the company also closed its distribution facility in La Vergne, Tenn., resulting in 108 layoffs.

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In addition, Home Depot filed a WARN notice on January 28 that it would lay off 800 employees at its store support center in Atlanta, Georgia.

The company even warned its corporate employees that starting April 6, they would be required to return to the office five days a week.

“We are streamlining company operations to better support our stores and customers,” a Home Depot spokesperson said in a statement. “Our goal is to increase agility so the company can move faster and stay closer to its frontline employees.”

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This article was originally published by TheStreet on February 20, 2026, and first appeared in the Retail section. Click here to add TheStreet as your preferred source.