NEW YORK, NEW YORK – FEBRUARY 26: General view of a Home Depot store in Midtown Manhattan on … More
The Home Depot has just announced that its SRS Distribution subsidiary, the cornerstone of its professional contractor “Pros” strategy, has acquired GMS Inc., further extending its reach into the building trades and contractor market.
The $4.3 billion deal, expected to close by the end of fiscal 2025, builds on Home Depot’s $18 billion acquisition of SRS in March 2024. GMS will complement SRS’s specialty in serving the roofer, landscaper and pool contractor markets with GMS’s expertise in supplying drywall, ceilings, steel framing and other materials for interior projects.
Beyond product expansion, GMS adds more than 320 distribution centers, including 100 tool sales, rental and service centers, as well as 3,000 specialized trucks suited for last-mile deliveries. GMS CEO John Turner and his senior executive team will continue to lead the company within the SRS organization.
“The combination of GMS and SRS will provide the residential and commercial Pro customer with more fulfillment and service options than ever before,” SRS CEO Dan Tinker said in a statement. “Together, we’ll create a network of more than 1,200 locations and a fleet of more than 8,000 trucks capable of making tens of thousands of jobsite deliveries per day.”
Upon the acquisition of SRS last year, Home Depot estimated its total addressable market increased by $50 billion, bringing its TAM in both the consumer and pro markets to $1 trillion.
Tightening Home Depot’s grip on the pro market will pay off down the line with consumers too because they will follow where the in-the-know professionals shop.
Pro Platform To Grow On
It’s still early days for the impact of SRS to be felt on Home Depot’s bottom line – SMS contributed $2.6 billion in revenues in the first quarter of 2025, ending May 4 – yet it has a powerful platform to build on and increase penetration in the pro market.
SRS maintains a 2,500-strong sales force and a nearly 800-branch network in 47 states to serve professionals. It also has a sophisticated order and credit management system, with over 90,000 accounts that have trade credit.
Home Depot CEO Ted Decker said during the latest earning call that Home Depot has “millions of Pro customers,” yet the number of professionals in its Home Depot Core Pro credit program is in the low single-digit thousands, so it has plenty of room to grow.
TD Cowen’s Max Rakhlenko wrote in an investor note, “While early, our confidence in HD’s ability to build out a broader complex Pro ecosystem is growing, and we see 2026 as a major opportunity to step change the size of the business.”
Downward Revision To Home Improvement Forecast
Growth forecasts in the home improvement market this year are complicated by many economic factors, including the potential impact of tariffs and high interest rates depressing the housing market.
While JP Morgan expects mortgage rates to ease to 6.7% by year end, analyst John Sims said that isn’t nearly enough. “The situation is not going to change until we get mortgage rates back down toward 5%, or even lower.”
High interest rates also impact consumer borrowing for major home renovations, both of the DIY and pro variety. The Home Improvement Research Institute just revised downward its previous 5% growth estimate for the overall home improvement market from earlier this year to 3.4%.
However, it expects the professional side of the business to do better, projected to increase 4.9% this year. Last year, the HIRI reported that the home improvement market reached $574.3 billion, and the professionals segment was approximately one-third of that, at $190 billion.
Home Depot CFO Richard McPhail said the company is projecting SRS to deliver mid-single-digit growth in the second half – in line with the HIRI pro industry forecast – and hinted that it could do better. “SRS has a track record of growing faster than their competition and taking share in any environment. So, we expect they will be an engine for growth for the company.”
Big Payoff Coming
Investing in the contractor market will yield benefits beyond market share growth with the pros because consumers will take the lead from the professionals when it comes to choosing places to shop. For example, Behr Paint Company has just signed a deal to sell its industry-standard KILZ paint primer line exclusively in Home Depot’s 2,000+ stores.
While Home Depot ended the first quarter 2025 with total sales up 9.4% to $39.9 billion, comparable sales were virtually flat. And through the first five months of the year, the building materials and garden supply retail market declined by nearly 1%, hardly living up to HIRI’s forecast. Overall, the company is guiding on sales growth of 2.8% this year and comp sales up 1%.
No matter how 2025 turns out, Home Depot is playing the long game. “We will continue investing in our business to ensure we are best positioned to gain market share, particularly in periods of disruption,” Decker said in the earnings all.
“For most people, their home is their biggest asset and home prices continue to rise. This has led to record levels of home equity, giving our customers confidence to invest in their homes. The housing stock is aging, and 55% of homes are 40 years or older. And we know that as homes get older, they require more maintenance and updates,” he added.
While consumer uncertainty is currently suppressing the home improvement market, the tide will turn. When that pent-up demand is finally unleashed, Home Depot won’t just be ready. It’ll be positioned to dominate.
