Home Depot ‘All in’ for MRO Growth

Interline addition boosts bottom line, commitment to distribution business.

The Home Depot is reaping the benefits of its $1.6 billion acquisition of Interline Brands, having reported a healthy sales and profit increase for the first quarter, but the Atlanta, GA-based big-box retailer has even bigger plans for its recently added maintenance and repair distribution business.

"We’re planning a $550 billion market 'all in' now with the addition of Interline and playing in the MRO space for multifamily, hospitality and institutional," President and CEO Craig Menear said on this week's earnings call with analysts. "And we own less than 20 percent of that in total. So we think there’s lots of opportunity to grow."

The Home Depot bought Interline last year from private equity firms Goldman Sachs Capital Partners and P2 Capital Partners, helping the company fill a hole it had in serving the professional contractor.

"In today's environment, we have the ability in many of these spaces to handle the remodel portion of the business," Menear said last year. "But we don't do as well on the maintenance and repair portion."

The Home Depot is now getting traction on this new model, which is designed to meet the needs of both DIY and professional segments while also posing a growing competitive threat for distributors with focus into construction and facilities maintenance markets.

"The desire for the customer – whether it’s an Interline customer to fill in and shop at The Home Depot and/or customers who are shopping in The Home Depot to have a desire to buy through Interline – is there," Menear said. "We’re pleased with it."

Menear said the "Interline integration is progressing nicely," as the company continues "to move forward on a number of exciting sales driven initiatives, and we have outlined a path to truly realize the value of the Interline acquisition and the total pro opportunity over the next 18 to 24 months."

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