4/1/2024

The SRS Deal: Times are changing

Thoughts on The Home Depot's blockbuster acquisition.

Back in 2007, Home Channel News—the forerunner of HBSDealer—traveled to Atlanta and spoke with Home Depot’s then CEO Frank Blake, a leader frequently credited with righting the ship of an off-course orange-colored organization.

He spoke of focus.

"You downscope what you try to do," he said. "You try to do fewer things better, rather than a lot of things OK.”

He added that every day at the retailer’s headquarters brings opportunities that might lead to revenue and value. "But you have to say, 'that’s not core to our business right now,' " Blake said. "Now is a good time to focus on what we need to focus on—our core retail company.”

WIth that attitude, the company closed its floor stores, shuttered its HD Landscape Supply and divested of its industrial-strength HD Supply division.

Things were a little different back then. Actually a lot different.

There was a post-Nardelli corporate culture to recapture. There was a crisis in the home construction industry. (Single family starts plunged to 622,000 in 2008, and were about to hover a few years in the 400,000s.) There was no such thing as US LBM Holdings or Nation’s Best, but there were such things as Stock Building Supply, BMC and ProBuild Holdings (now all rolled up into a powerfully growth-oriented Builders FirstSource).

Home Depot reacquired an MRO version of HD Supply in 2020, in an $8 billion deal to boost its maintenance, repair and operations ceiling.

Now comes an even bigger pro play: an $18 billion blockbuster for SRS Distribution, the Kinney, Texas-based specialty distributor of roofing materials (and more) with multiple brands across 760 locations and 47 states.

SRS operates 46 banners, from Aloha Roofing Supply to Wimsatt Building Materials.

Among the brands: American Roofing Supply, Aloha Roofing Supply, Arrowhead Building Supply, Advanced Building Products—and those are just a few listed alphabetically in the A’s.

“SRS has built a robust and successful platform that will accelerate our growth with the residential professional customer while presenting future opportunities with the specialty trade pro,” said Ted Decker, Home Depot CEO.

Home Depot has been courting the pro for years. And now it has more fulfillment and service options than ever before. Once the deal is settled, then begins the task of putting the networks together to find faster, better or cheaper ways to service the pro.

There are no guarantees in this world — especially not in the complex channel of building product distribution.

Still, for everyone else competing for a slice of the pro market, this is an $18 billion exclamation point on the idea that there's never been more competition out there.

For many, it might be a good time to take a page out of Frank Blake's late 00's playbook and focus on doing what you do well, and doing it better.