The Home Depot has announced plans to grow its supply division to $23-$27 billion by 2010. The Atlanta-based DIY giant wants The Home Depot Supply to become the nation’s No. 1 diversified wholesaler.
In just the past year, The Home Depot Supply has grown by 143%, according to numbers provided at an investor conference. HD Supply’s organic growth in 2005 was 20%.
HD Supply’s growth strategy is to continue on that trail and into more distribution markets tangential to their current product and service offerings, said Joe DeAngelo, who leads HD’s supply division.
‘The strategy of Home Depot Supply is to repeat in the professional space the same type of market transformation The Home Depot executed in the do-it-yourself space,’ DeAngelo said. ‘We have established platforms that cover the continuum, from heavy infrastructure through construction to lifetime maintenance.’
HD estimates the professional supply market to be a $410 billion opportunity. HD Supply’s sales before it announced it would buy Hughes Supply were about $3.8 billion, or 5% of HD’s 2004 revenues. The Home Depot expects the supply division will grow to 18% to 19% of its revenues by 2010.
The Home Depot’s planned acquisition of diversified distributor Hughes Supply is expected to double the supply division’s revenues to $12 billion in 2006. Hughes Supply will open three new platforms for Home Depot Supply: electric utilities (transmission and distribution equipment), electrical (wire, cable and lighting), and industrial PVF. DeAngelo said Hughes adds scale to its offerings in waterworks, plumbing, construction materials and MRO for the multifamily property market.
Home Depot has bought at least nine distribution companies in the past year.
On the retail side, Home Depot still plans further growth, looking to open 400-500 new stores by 2010. About 115 will open in 2006, CFO Carol Tome said. It is also entering the convenience store/fueling station business; HD plans to open four 3,000-foot stores in the next year. HD also plans to try new and smaller store formats including what it terms ‘infill stores’ for urban markets.
HD also plans to expand into more countries, with China top on its list. Frank Blake, executive vice president, said there is still no time table set for entry into the country.
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