Home Depot strengthens pro market by acquiring GMS for $4.3 billion

In the United States, Home Depot's SRS Distribution subsidiary has recently acquired GMS Inc. for $4.3 billion, aimed at enhancing its footprint within the professional contractor market. This acquisition allows SRS to extend its reach into the building trades by adding over 320 distribution centers, including a considerable number designated for tool sales, rental, and service centers. Furthermore, the integration of GMS is expected to create a robust network, featuring more than 1,200 locations and an expansive fleet of over 8,000 specialized trucks for last-mile deliveries, significantly increasing service and fulfillment options available to both residential and commercial Pro customers. SRS CEO Dan Tinker highlighted that this merger would provide the Pro segment with unprecedented fulfillment and service options. Moreover, the acquisition aligns with Home Depot's strategic vision to increase its total addressable market. Following the acquisition of SRS last year, Home Depot anticipated that its total addressable market would grow by $50 billion, raising its total market size in both consumer and Pro markets to $1 trillion. In response to the evolving market dynamics, Home Depot CEO Ted Decker noted the potential for growth, especially as the company plans to leverage the acquisition to strengthen its position among professional customers. Though currently only a small portion of its Pro customers are enrolled in the Home Depot Core Pro credit program, Decker stated that there remains significant opportunity for expansion in this area. Analyst Max Rakhlenko reflected that while it's early in the integration process, the expected growth in the Pro segment is promising, with 2026 earmarked as a crucial year for the business. Economically, the home improvement sector is facing challenges such as rising mortgage rates and declining demand for major renovations. The Home Improvement Research Institute recently downgraded its growth projections for the overall market from 5% to 3.4% due to these trends. Despite these challenges, Home Depot remains committed to investing in its business to solidify its market share. CFO Richard McPhail projected SRS would achieve mid-single-digit growth in the latter half of the year, suggesting that the adjusted forecast may still lead to improved performance despite current market downturns. The aging housing stock, with 55% of homes over 40 years old, is also a potential driver for future demand as homeowners will require more maintenance and updates.