Earlier this week, Home depot Said one of her business units was the purchase of a distributor of construction products GMS For about $ 4.3 billion, prevailing at war with bidding and shows how serious the home improvement chain is to conquer the market for professional contractors at a time when the Do-With-It is difficult.
GMS, whose name stands for “gypsium and supply management” and which is based in Tucker, GA, is not the sexiest goal of acquiring. But then again, there is a wide network of about 320 distribution centers that offer something like Wallid, ceilings, steel staff and other construction items. Moreover, GMS works approximately 100 tools of tools, rental centers and customer service centers for residential and commercial contracts, all domestic warehouses.
The deal monitors the acquisition of the $ 18 billion Home Depot’s landmark last year from the SRS distribution (which is the subject that actually buys GMS). This was the largest acquisition in the history of the company to help Home Depot win a much larger share in the segment of performers of mammoth professionals. These clients were usually used by Home Depot and Lowe’s minor and collaborated closer to retailers to improve the home care.
With the GMS agreement, SRS will dominate the market for professional suppliers and outside the home (roof, swimming pool, yard) and inside (Wallidboard, steel framing and ceilings), Cowen Analyst for & CO, Max Rahlenko, wrote in a research note. Rahlenko praised the deal, saying he “would allow the SRS to expand to additional verticals, develop market share, consolidate the industry and significantly increase the HD supply chain and distribution network.”
While the market was neither excited nor anxious by GMS News at Home Depot (his actions were flat on the day the deal was announced), the deals together show that Home Depot makes a big, careful pink in his strategy. Home Depot is considered one of the most successful retailers in the last 20 years, the one who has skillfully used a warm housing market that has led more people to renovate their homes. But now, Home Depot believes that stable growth in the future will not only come from its 2,000 stores with large boxes that serve people who are doing relatively simple homes projects. Instead, it wants some of the large orders set by professionals for many more projects, such as installations for pools and roof repairs. In The first quarter From the current fiscal year, sales in US stores opens at least one year increased by 0.2%, showing the need for this updated strategy.
“Pro growth is a key part of our growth strategy,” said Ann Marie Campbell, senior vice president of US shops and operations at Home Depot, Wall Street analysts told February. And it is the cornerstone of the CEO of Home Depot of three years, Ted Decker, in his efforts to immortalize the success of retail that succeeded wildly under his two predecessors.
The contracts are a reminder of how careful home warehouse has long been in its strategy for M&A. About 20 years ago, Home Depot focused its M&A on acquiring brands to fill its range in the store. Then, in 2010, he invested in his e-commerce fiery power and logistics and equipped the digital sales stores. Recently, the focus was on modernizing his range of growing areas as smart home products.
That approach served M&A to the well-disciplined retailer and helped him surpass the Lowe’s archital in terms of sales growth: last year, its annual sales reached $ 159.5 billion, almost twice as much as a decade earlier.
And it is refreshing when so many deals in the world of retail and consumer products that have not transformed companies, but instead led to large records.
Years of Lowe, leading Canadian retailer Rona to get a foundation north of the border, just to sell it two years ago and lose about $ 2 billion in the process. The acquisition of the tapestry in 2017 at Kate Spade, whose sale fell by 13% last quarter, led to a number of records. Capri Holdings He recently sold Versace with great loss. Supply of the Alliance of Wolfs boots for several years from 2,000 Help for ritual Shops have proven to be a big waste of money at the beginning of this year, Coca-Cola took $ 760 million enrollment for his sports Bodearmor drink because of disappointing sales and Dollar tree He said he was selling his division of the family dollar with a great loss.
And on and on it goes. About 70% of M&A deals end up as failures. Many of them can feel like a healthier Mary passes away from the brand desperate for growth, or a way to take out a rival, or simply the result of a company to overestimate his ability to turn another. Yes, there are concerns that the M&A cycle can reduce the margins of the domestic depot in the short term. But Home Depot’s deliberate and careful approach to M&A has greatly paid off in the long run and should serve as a model for big companies on how to make a successful addition.
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