The New Pro Home Depot (Issue #82)
The Home Depot (NYSE: HD — $281.9b) is changing a core part of its business. Home Depot can categorize the major of its business into two columns, the consumer business and the pro business. Currently, the consumer business accounts for a larger portion of revenue, however, in the companies TAM and revenue projections they forsee pro becoming a larger part of their business.
"Pro is our biggest growth opportunity, and in order to provide the products and capabilities pros need, we are evolving our organization and approach to better serve them,"
Ted Decker, CEO
The pro business is the biggest competitive advantage that Home Depot has. For example, because of the quality of their pro business service and the connections they’ve built it makes it difficult for Lowe’s, Tractor Supply, or even Amazon to come in and take over market share.
The pro business can increase per store sales which becomes an increasingly key focus as Home Depot reaches saturation at ~2300 US locations. Growth in same store sales has been a great success point for the company so far and with a growing pro business the stat should be fortified going forward.
With all of this in mind, Home Depot has promoted two key people, Ann-Marie Campbell and Hector Padilla, to Senior EVP and EVP of US Stores and Ops. (respectively). Both of these promotions are meant to increase focus on the development of the pro business going forward.
Nelnet (NASDAQ: NNI — $3.17b) among other student debt holders is being researched for a federal debt forgiveness program. If this goes through this would be a 9 or 10 figure check going directly to the company. I do not want to get prematurely excited by this opportunity but it will be a key item to track.
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Until Sunday,
Soren