Atlanta, Georgia – Home Depot, a major retailer, has recently made its largest acquisition in history, signaling a strategic move to expand its presence in the professional construction market. With half of its current business coming from professional customers and the other half from do-it-yourself consumers, the Atlanta-based company is focused on attracting more professionals as homeowners shift away from DIY projects.
CEO Ted Decker described the acquisition as a significant step in Home Depot’s efforts to tap into the lucrative construction industry. The deal is expected to increase the company’s total addressable market by $50 billion, positioning Home Depot as a key player in the professional space.
This acquisition adds to a series of recent deals made by Home Depot in the professional market, including the acquisition of HD Supply, a distributor of maintenance, repair, and operations products. With a growing network of distribution centers, Home Depot aims to stock large quantities of items needed by professionals, such as lumber and shingles, for direct delivery to job sites.
SRS Distribution, based in McKinney, Texas, focuses on providing supplies to professionals in landscaping, pool, and roofing businesses. With approximately 11,000 employees, 760 branches across 47 states, a fleet of 4,000 delivery trucks, and a dedicated salesforce, SRS Distribution is a key player in serving the needs of home professionals.
Despite potential challenges from federal regulators due to increased scrutiny of mergers and acquisitions, Decker expressed confidence that the acquisition will be approved. He anticipates the deal to be dilutive to Home Depot’s earnings per share initially but accretive in terms of cash earnings per share in the first year post-closure.
As Home Depot navigates through a period of moderating sales growth, the company is focusing on expanding its pro business, improving the shopping experience for customers, and opening new stores. With plans to open a dozen new stores and cater to professionals through distribution centers, Home Depot is strategically positioning itself for future growth.
Looking ahead, Home Depot expects slower sales trends to continue, with total sales projected to grow by about 1% for the year. Comparable sales, excluding the effects of store openings and closures, are expected to decrease by about 1%. Despite these challenges, Home Depot remains optimistic about its position in the market.
With a strong market performance, Home Depot’s shares have seen an 11% increase this year, outperforming the S&P 500. The company’s stock closed at $385.89, reflecting a market value of approximately $382 billion. As Home Depot continues to navigate market challenges and pursue strategic acquisitions, the company remains focused on meeting the evolving needs of its customers and driving growth in the professional construction market.