Home Depot’s purchase of roofing company SRS Distribution may be the building block it was missing to reach every type of home improvement person.
“SRS is opening up a new customer for us,” said Richard McPhail, the chain’s executive vice president, during a fireside chat at J.P. Morgan’s 10th Annual Retail Round Up investor conference on Thursday.
SRS Distribution, which provides supplies for roofing, landscaping, and pool contractors, will open up a new segment for the home improvement company, he added.
“We now have the opportunity to sell to every occasion,” said McPhail, who also serves as chief financial officer. He explained that without the acquisition, “it would’ve been hard to penetrate that speciality product market.”
In late March, Home Depot spent $18.25 billion to acquire SRS. The deal, which included assumed debt, is expected to be paid off at closing, McPhail said during the conference.
“It was a unique window and time for both of us,” he said. Moreover, the agreement means Home Depot is passing the baton to another company that has a better handle on a specific market. That could work in Home Depot’s favor as it now believes that the “total addressable market is approximately $1 trillion.”
Home Depot has more than 2,300 retail stores across all 50 U.S. states. Meanwhile, SRS has roughly 760 locations in 47 U.S. states and a fleet of over 4,000 trucks. Home Depot isn’t the only home improvement company trying to expand its footprint through nontraditional means. Earlier this month, Lowe’s signed a deal with DoorDash that would give customers the option to purchase Lowe’s products through DashPass, DoorDash’s membership program.
When asked if the company had plans to acquire other niche firms, such as plumbing, McPhail said that it will depend on the state of the market and the demands of its customers.
But even so, persistent inflation continues to impact customers, who feel fickle about making large home improvement purchases.
Home Depot expects sales to be lower during the 2024 fiscal year, said McPhail, who pointed to outliers like grills and patios as ticket items customers are holding off on purchasing.
“There’s still pressure there but not quite at the same degree,” he said.