Home Depot recently announced its acquisition of SRS Distribution in a $18.25 billion deal, marking the company’s largest acquisition to date. The acquisition is part of Home Depot’s strategy to increase sales by targeting contractors, roofers, and other home professionals. The deal is expected to close this fiscal year, and the company plans to finance the acquisition through a combination of cash and debt. Home Depot currently draws half of its business from professionals and the other half from DIY customers, and with the acquisition, the company aims to further expand its reach in the professional market.
CEO Ted Decker described the deal as a “complementary accelerator” to Home Depot’s efforts to attract more professionals. SRS Distribution, based in McKinney, Texas, has 760 branches across 47 states and specializes in supplying professionals in the landscaping, pool, and roofing industries. The company also has a fleet of 4,000 delivery trucks and a dedicated salesforce that caters to home professionals. By acquiring SRS Distribution, Home Depot aims to increase its total addressable market by $50 billion and further solidify its position in the professional market.
Home Depot has been focusing on the professional business as its growth slows due to changing consumer trends. The retailer has experienced moderating sales as consumers prioritize grocery bills and experiences over big-ticket home improvement projects. To drive growth, Home Depot is opening new stores, attracting more professional sales, and enhancing the overall shopping experience for customers. The company plans to open a dozen new stores during the fiscal year and recently announced the opening of four distribution centers catering to professionals.
Despite expecting slower sales trends to continue, Home Depot remains optimistic about its prospects for the future. The company anticipates total sales for the full year to grow by about 1%, including an additional week in the fiscal year. However, comparable sales are expected to drop by approximately 1%. Home Depot currently operates 2,335 stores across the U.S., Mexico, and Canada, employing about 465,000 people. The acquisition of SRS Distribution is seen as a strategic move to drive growth and maintain its competitive edge in the market.
Shares of Home Depot have risen by about 11% this year, slightly outpacing the gains of the S&P 500. The company’s stock closed at $385.89 on Wednesday, with a market value of approximately $382 billion. The acquisition of SRS Distribution reflects Home Depot’s commitment to expanding its reach in the professional market and driving sales through strategic acquisitions. The company continues to prioritize the professional business as it navigates changing consumer trends and positions itself for future growth and success.
