Home Depot Accelerates Interline Store Rollout

Company sees pro customers as huge growth driver for 2017.
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The Home Depot's rollout of Interline Brands' product catalog, announced last year, has expanded to all its U.S. stores and is expected to grow wallet share with the company's pro customers, CEO Craig Menear said this week on the quarterly earnings call with analysts.

"The next phase of the integration is focused on enabling Interline's customers to use their Interline accounts for purchases in Home Depot stores or on homedepot.com," Menear said. "We're excited about the opportunity Interline provides us to expand our share of wallet with pro customers."

Home Depot expects Interline, which the company acquired in 2015 for $1.6 billion, to "grow faster than the company average in 2017, which was true in the fourth quarter as well," said CFO Carol Tomé.

Tomé tempered investor expectations with this caveat: "But remember, Interline is less than 2 percent of our total sales. So it just rounds out at the end of the day, and that's why our comp sales guidance is the same as our total sales guidance for 2017."

Although Interline Brands is a small percentage of company sales, The Home Depot performed well in 2016, the first full year with the MRO company in its portfolio. The Home Depot reported sales for 2016 of $94.6 billion, an increase of 6.8 percent from the previous year, while fourth-quarter sales were $22 billion, an increase of 5.8 percent from fourth quarter 2015.

And the future looks bright for The Home Depot to expand MRO market share with the help of Interline, Menear said. "It is a $50 billion market opportunity across multifamily, hospitality and institutional … (and) we own about 5 percent, give or take, of that market," he said. "That's what we're focused on here in 2017."

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